Senate Banking Committee Investigates Stablecoin Issuers

• The United States Senate Banking Committee (SBC) has sent letters to several stablecoin issuers requesting information regarding their business practices.

• The stablecoin issuers in question include Circle (USDC), Gemini (GUSD), Paxos (USDP), Trust (TUSD), Binance (BUSD), and Tether (USDT).

• The letters sent out include a variety of questions including:

  • to describe the basic purchase, exchange, or minting processes for U.S. dollars

  • a detailed explanation of how individuals can redeem the stablecoin and receive U.S. dollars.

  • an outline—since inception— of how many tokens have been issued, and how many have been redeemed

  • a “stress test” query. 

    “Briefly characterize the market or operational conditions that would prevent the purchase, or redemption, or [stablecoin token] for U.S. dollars, or another digital asset

  • to identify any trading platforms that have “enhanced capabilities, privileges, or special arrangements” with respect to the issued stablecoin

  • summarize any internal reviews that may have been conducted about “how specific levels of redemptions would affect [the stablecoin], including its convertibility into U.S. dollars”

• The companies have until December 3rd, 2021 to respond.