Bloomberg published an editorial in which it foresees the dangers for the traditional financial system with the combination between the cryptocurrency company Tether Limited and the upcoming government of Donald Trump in the United States.

The outlet highlights that the Trump-Tether duo “presents quite a few potential problems” and that two in particular stand out.

First, the more Tether grows, takes risks and interconnects with Wall Street firms like Cantor Fitzgerald, the financial firm of Hotward Lutnick, the future US Secretary of Commerce, the greater the possibility that “cryptocurrency crises will infect the broader financial system.”

Second, Bloomberg suggests that the interconnectedness between the two ecosystems could facilitate the transmission of instability from the cryptocurrency market to conventional financial institutions, complicating global financial stability.

The publishing company believes that a “resurgent Tether” could expand opportunities for illicit activity, “undermining the ability of governments to combat crime, counter terrorism and enforce sanctions.”

This is because Tether, as a stablecoin, could serve as a medium for transactions that evade oversight and regulation, thus allowing malicious actors to operate with greater impunity, Bloomberg's editorial board suggested.

The editorial notes that transaction volume for Tether’s flagship stablecoin USDT more than doubled following the election that saw Donald Trump elected, totalling around $4.6 trillion in November. This explosion in USDT usage underscores concerns about stability and regulation.

Congress must intervene, says Bloomberg

Bloomberg says that, given the rise of stablecoins and Tether in particular, “the ideal would be for Congress to impose order.” This would be by requiring stablecoin issuers to “hold only safe and liquid assets and take much greater responsibility for monitoring transactions and reporting suspicious activity.”

Bloomberg calls on US Congress to intervene in stablecoin regulation. Source: W.Scott McGill / stock.adobe.com.

Tether is the issuing company behind the stablecoin USDT, a cryptocurrency whose value is tied to the US dollar to maintain its stability. It is the largest stablecoin by trading volume and currently the third most valuable cryptocurrency on the market, with a market capitalization of $139.3 billion, according to CoinMarketCap.

Bloomberg's warning comes as Europeans are saying goodbye to USDT due to the MiCA regulations, which force cryptocurrency companies operating in the European Union (EU) to remove this stablecoin from their offering since it does not meet the requirements to be able to circulate in the countries of the bloc.

In November 2024, it became known that the incoming Trump administration held meetings with Tether. Commerce Secretary Lutnick discussed receiving support from Tether for a multi-billion dollar program.

This interaction between the Trump administration and Tether adds another layer of complexity and concern about how the cryptocurrency landscape could evolve under the new policies, according to Bloomberg.

This relationship between Tether and a government with a pro-cryptocurrency agenda could, according to Bloomberg, destabilize not only the cryptocurrency market, but also the global financial system if not managed carefully and properly regulated.