Tether has formed a partnership with Chainalysis in order to monitor transactions involving the USDT stablecoin on secondary markets. This move comes as regulators increase their scrutiny of stablecoin issuers and aim to crack down on criminal activities in the crypto industry. Chainalysis will be responsible for alerting Tether to any transfers to sanctioned entities, terrorist organizations, hacker groups, or any other illicit activities.
While criminal activities in the crypto world make up only a small percentage of overall activity, stakeholders are investing significant amounts of money to combat it. Tether, the company behind the USDT stablecoin, has joined forces with Chainalysis to monitor transactions involving USDT. This partnership will enable Tether to gain a better understanding of the stablecoin’s secondary market activity, as well as identify any wallets that may pose risks or be associated with illicit or sanctioned addresses.
The partnership with Chainalysis is crucial for Tether due to the stablecoin’s position as the largest in the market, with a market cap of $110.94 billion. Tether has faced regulatory scrutiny in the past, with allegations ranging from Bitcoin manipulation to misleading statements about the stablecoin’s backing. However, the most significant risk for Tether is its potential use in criminal activities, as demonstrated by cases against other crypto industry players such as Binance and BitMEX.
The use of stablecoins in criminal activities is not a new phenomenon. According to a report by Chainalysis, stablecoins accounted for 70% of all crypto scams and 83% of crypto sent to sanctioned entities in the previous year. Sanction evasion alone resulted in $24.2 billion in stablecoin volume between 2022 and 2023. The partnership with Chainalysis will help Tether ensure compliance and address this risk.
This partnership is not only important for Tether and USDT but also for the entire crypto industry, as the stablecoin represents a significant portion of all crypto transactions. Over the weekend, the crypto market experienced sideways trading, with a slight increase in overall market cap from $2.225 trillion on Friday to $2.35 trillion at the time of writing. Bitcoin’s price is currently at $63,745, recovering from a dip earlier in the week following the sentencing of CZ and others in the industry.