In a surprising turn of events, Tether, the world’s largest stablecoin issuer behind USDT, has made significant amendments to its Terms of Service (ToS) that impact its customers in Singapore. The alterations have raised concerns among users, particularly those associated with the decentralized finance protocol Cake.
Tether’s restriction on USDT redemption
The CEO of Cake Group, Dr. Julian Hosp, took to social media platform X (formerly Twitter) on September 25 to share an email from Tether informing Cake that they are no longer eligible to redeem USDT for USD due to changes in Tether’s ToS, effective just one day prior. Dr. Hosp expressed uncertainty about whether they could continue to redeem USDT into USD while being based in Singapore.
The key changes in Tether’s ToS primarily focus on stricter onboarding standards and explicitly state that “corporates controlled by another entity, directors, and shareholders residing in Singapore are no longer permitted to be Tether customers.”
This clause, particularly the term “controlled by another entity,” has stirred confusion within the cryptocurrency community, notably among Cake DeFi users. Cake DeFi received a notification stating that they “are controlled by another corporation in Singapore” and, as a result, would not be permitted to issue or redeem USDT on the platform.
Contextual concerns
Many within the cryptocurrency ecosystem have pointed out the timing of Tether’s ToS change, which coincides with one of the largest crypto money laundering scandals in Singapore’s history. Assets seized from the bust have surged to over $2 billion, leading some to speculate that the alteration in USDT redemption terms may be related to the broader regulatory landscape in Singapore.
However, others argue that the issue might be specific to Cake DeFi. The DeFi protocol has been flagged for enhanced due diligence (EDD), hinting that this change in Tether’s ToS could potentially be a result of a partnership issue between the two firms.
Tether’s alteration of its ToS for Singaporean customers has left many in the cryptocurrency community concerned. Stablecoins like USDT are crucial to the functioning of the digital asset ecosystem, providing a bridge between the volatile world of cryptocurrencies and the stability of traditional fiat currencies like the US dollar. Any disruption in their usage can have ripple effects throughout the crypto markets.
The cryptocurrency space has been grappling with regulatory uncertainties worldwide, and Singapore is no exception. The Monetary Authority of Singapore (MAS) has been actively reviewing and updating its crypto-related regulations to ensure they are in line with international standards and do not pose risks to financial stability.
The exact reason behind Tether’s decision to restrict USDT redemption for certain customers in Singapore remains unclear. It could be a response to regulatory pressure, an attempt to comply with evolving regulations, or a matter specific to Cake DeFi. Regardless, it underscores the dynamic and evolving nature of the cryptocurrency industry.
In light of these changes, Cake DeFi and other affected parties are likely to seek further clarification from Tether. Understanding the specific criteria that led to these restrictions and the potential pathways for resolution will be essential for users and businesses navigating this new landscape.
