U.S. Senator Cynthia Lummis said a recent lawsuit against Tether over its freeze of $42.4 million in USDT exposes a regulatory gap in how the crypto sector addresses illicit finance. According to Lummis, stablecoin issuers and trading platforms can currently face civil litigation when they freeze assets based on suspected illegal activity. She pointed to Section 305 of the Digital Asset Market Structure Clarity Act, saying it would give stablecoin issuers and exchanges the authority needed to freeze stablecoins tied to suspected illicit activity in a timely manner while protecting them from civil liability for doing so. Lummis said the provision would help the crypto industry stop illegal fund flows more effectively and address the legal risks issuers and platforms face when taking compliance-related action.
On Sept. 10, U.S. Senator Cynthia Lummis said a recent lawsuit against Tether over its freeze of $42.4 million in USDT highlighted a regulatory gap in the crypto industry's efforts to combat illicit finance.
Lummis said stablecoin issuers and trading platforms may currently face civil litigation if they freeze related assets based on suspected illegal activity.
Section 305 focuses on freezing authority and liability protection
She said Section 305 of the Digital Asset Market Structure Clarity Act would grant stablecoin issuers and trading platforms the authority needed to promptly freeze stablecoins suspected of being linked to illegal activity, while shielding them from civil liability tied to those actions.
In her view, the provision would help the crypto industry block illicit fund flows more effectively and address the legal risks issuers and trading platforms face when taking compliance measures.
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