9 months ago
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Sanctions by OFAC
Analysts at US financial giant JP Morgan announced on the 15th that the US authorities, through the Treasury Department's Office of Foreign Assets Control (OFAC), will be able to exercise a certain amount of control over companies issuing the stablecoin Tether (USDT). He made it clear that he thought it was possible.
Nikolaos Panigirtzoglou of the bank said that even though Tether is not a US company, “we can control the offshore use of Tether to some extent” through OFAC sanctions and other measures.
One example is Tether's relationship with Tornado Cash, a privacy-enhancing platform on the Ethereum network.
OFAC is an agency of the Department of the Treasury that enforces sanctions imposed by the government based on U.S. foreign policy and national security objectives. In August 2022, Tornado Cash, a mixing service that anonymizes crypto asset (virtual currency) transactions, was placed on the Sanctions List (SDN).
connection:U.S. Department of the Treasury designates virtual currency mixing firm Tornado Cash as subject to sanctions
Circle, Inc., the issuer of the stablecoin USD Coin (USDC), quickly responded by blacklisting addresses related to Tornado Cash on its sanctions list, but Tether, under explicit instructions from US law enforcement, has publicly refused to comply with OFAC, saying it will not take any action unless it does so. “Unilaterally freezing secondary market addresses could be a highly destructive and reckless action by Tether.”
Later, in November of the same year, OFAC temporarily removed Tornado Cash from this sanctions list, and stated that it had provided “substantial support, financial, material, technical assistance, or goods or services to the North Korean government.'' '', the service was once again designated as subject to sanctions based on the sanctions order regarding North Korea.
Additionally, in August 2023, the U.S. Department of Justice indicted two co-founders of Tornado Cash on charges of money laundering, sanctions violations, and conspiracy to operate an unlicensed money transfer business.
connection:US Department of Justice indicts Tornado Cash founder on charges of aiding and abetting money laundering of over 140 billion yen
In December 2023, 16 months after refusing to comply with the OFAC sanctions list, Tether suddenly announced a change in policy. It said it would expand its security protocols and freeze addresses associated with individuals and entities subject to U.S. sanctions.
The main purpose of this approach is to proactively prevent potential misuse of Tether tokens and strengthen security measures.
Given the circumstances described above, experts believe that it is now more likely that OFAC sanctions will affect companies that are not based in the United States.
Tether CEO rebuts
Tether CEO Paolo Ardoino said JPMorgan's concerns could be a result of jealousy over the development of financial and payment services.
JPMorgan's current concerns seem to be that it is bemoaning and jealous that the evolution of financial and payment services, which it has ignored for a decade, is now receiving significant attention. If I were them, I would be more worried about the $39 billion in fines imposed on my company.
Strong performance and JP Morgan's perspective
At the end of last month, Tether reported its financial results for the fourth quarter of 2023, with USDT's market capitalization reaching approximately $100 billion (approximately 15 trillion yen) and a record profit of $2.85 billion (approximately 427.7 billion yen). announced that it had released. He also emphasized that the company's business performance is extremely strong, stating that the company's total profit in 2023 reached $6.2 billion (approximately 930 billion yen).
In response, JP Morgan stated in a research report earlier this month that the stablecoin USDT's increasing market share is unfavorable.
We believe the increased concentration on Tether over the past year is negative for the stablecoin space and the broader crypto ecosystem.
JPMorgan pointed out that behind Tether's rise is “turmoil” at other companies in the industry, including USDC and major exchange Binance's BUSD.
In response to this point, Tether's CEO Ardoino said that Tether's dominance in the market may be negative for its competitors, including the banking industry, but it is definitely not good for the markets that need it. “It wasn't negative,” he said, criticizing JPMorgan's stance.
In fact, Tether showed more resilience than several large US banks during last year's black swan event…It seems hypocritical for the world's largest bank to talk about increased concentration.
The post JP Morgan: “U.S. authorities can also exert influence on Tether (USDT)” appeared first on Our Bitcoin News.
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