U.S. Lawmakers Introduce CLARITY Act to Limit Federal Ties with Chinese Blockchain

United States Representatives Zach Nunn and Abigail Spanberger have jointly introduced the Creating Legal Accountability for Rogue Innovators and Technology Act of 2023, known as the CLARITY Act of 2023. This legislation is designed to prevent federal government officials from engaging in business transactions with Chinese blockchain companies.

The CLARITY Act would prohibit government employees from using the underlying networks of Chinese blockchain or cryptocurrency trading platforms. It explicitly bars U.S. government officials from conducting transactions with iFinex, the parent company of Tether (USDT) issuer.

In addition to iFinex, the CLARITY Act would also prevent officials from conducting transactions with the Spartan Network, the Conflux Network, and Red Date Technology. According to the lawmakers, if this legislation is passed, it will ensure that the nation’s “foreign adversaries… do not have a backdoor to access critical national security intelligence and Americans’ private information.”

The move to introduce the CLARITY Act follows previous reports that Tether was exposed to Chinese securities and other Chinese firms. In June 2023, it was revealed that Tether held securities from Chinese state-owned firms, including the Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China, as reported by Bloomberg. This disclosure raised concerns about the assets backing Tether’s stablecoin.

Tether’s reserves included significant short-term loans to Chinese firms and a substantial loan to the cryptocurrency platform Celsius Network. While Tether had previously denied any involvement with the debt of China’s troubled Evergrande Group, it had not disclosed its holdings of other Chinese securities.

Furthermore, the U.S. Securities and Exchange Commission (SEC) has been closely monitoring Tether’s operations. In September, a report suggested that Tether had secretly resumed offering USDT stablecoin loans to customers, a year after pledging to cease providing secured loans.

The introduction of the CLARITY Act underscores Washington’s increasing concerns about Chinese connections within the cryptocurrency sector. This legislation seeks to address these concerns by limiting the federal government’s ties with Chinese blockchain entities, particularly those with potential national security implications.

By Urik

My professional background is in public relations and I am the founder of Cryptochating. My journey into blockchain technology started four years ago, and I haven't looked back since then. The future of decentralized technology is incredibly fascinating to me, and I am passionate about communicating how it will change the world.

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