U.S. Reps. Zach Nunn and Abigail Spanberger co-introduced the Creating Legal Accountability for Rogue Innovators Act of 2023 and Technology Act of 2023), also known as the CLARITY Act of 2023. The bill seeks to ban federal government officials from doing business with Chinese blockchain companies.
This bill will prohibit Government employees use the underlying network of Chinese blockchain or cryptocurrency trading platforms. Additionally, it would explicitly prohibit U.S. government officials from trading with iFinex, the parent company of USDT issuer Tether.
In addition to iFinex, the CLARITY Act would prohibit officials from trading with Spartan Network, Conflux Network and Red Date Technology. Lawmakers said in a statement Wednesday that the legislation, if passed, would ensure that America’s “foreign adversaries … do not have a backdoor to obtain critical national security intelligence and Americans’ private information.”
Tether reportedly approached China Securities and other Chinese companies as early as 2023. On June 16, multiple news sources, including Bloomberg, disclosed that the company had previously held securities in Chinese state-owned enterprises. Bloomberg quoted documents released by the New York Attorney General, emphasizing that deposits from entities such as the Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China support Tether (USDT).
The news comes after years of investigations and concerns about the assets backing the Tether stablecoin.
Tether’s reserves include large short-term loans to Chinese businesses and large loans to cryptocurrency platform Celsius Network. Tether has previously denied any involvement in the debt of China’s troubled Evergrande Group but did not disclose other Chinese securities it holds.
related: Tether issues $610 million in debt financing to Bitcoin miner Northern Data
In addition, the U.S. Securities and Exchange Commission is also closely monitoring Tether’s operations. A report in September revealed that the company began secretly offering USDT stablecoin loans to customers a year after promising to stop offering secured loans.
As the bill’s sponsors say, the latest move underscores Washington’s growing concerns about China’s ties to the cryptocurrency space.
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