Whoever controls Stablecoin controls Crypto.
Written by: Angus Berwick
Translated by: Luffy, Foresight News
In the Alpine town of Lugano, Switzerland, the newly minted billionaire Giancarlo Devasini lives a reclusive life. He resides in a modest apartment by the lake, wearing a black hoodie as he strolls along the cobblestone streets, seething with anger towards an American competitor he believes is trying to undermine his business.
Devasini is one of the main owners of Tether, the company that issues the digital dollar USDT, an indispensable part of the cryptocurrency industry. The core position of USDT has helped Devasini amass immense wealth, wield significant influence in the crypto sector, and gain the support of a top ally in President Trump.
Critics claim that USDT has become the preferred tool for criminal organizations to transfer funds globally.
A powerful rival attempting to disrupt Devasini's business empire is Jeremy Allaire, the founder of Circle, Tether's arch-nemesis, which issues a stablecoin called USDC. Allaire is a suited executive who navigates comfortably in Davos, Wall Street, or the halls of Congress. He is launching a campaign to eliminate USDT through regulation.
Devasini has told business partners that Circle is slandering USDT to politicians and inciting law enforcement action against Tether. In Devasini's view, Circle wants to turn the industry into another regulated corner of finance, while he hopes cryptocurrency can maintain its bold, fearless, and anti-establishment roots.
In 2014, Tether CEO Giancarlo Devasini in Milan
Months ago, Devasini told a partner, "As long as USDT is around, Circle will not win."
This struggle concerns the future of the $3 trillion cryptocurrency industry. The Trump administration, which supports cryptocurrency, was supposed to usher in a golden age for the sector, and on Sunday, Trump announced a strategic reserve plan for cryptocurrency. However, the calls to bring cryptocurrency into the mainstream through government regulation have sparked a life-and-death battle among cryptocurrency participants. While the law is expected to be generally friendly to the crypto industry, it could be devastating for individual players like USDT that stand against the new rules.
Allaire has been encouraging governments in the U.S. and elsewhere to legislate against the use of USDT tokens issued abroad. A similar law in the European Union took full effect last December, and the U.S. has proposed similar legislation.
USDT is the undisputed industry leader, used in four out of every five cryptocurrency transactions. The USDT holding company, in which Devasini holds a 50% stake, reported a profit of $13 billion last year, double that of BlackRock, with profits primarily coming from its substantial holdings of ultra-safe U.S. Treasury bonds, which underpin the 1:1 value of USDT to the dollar.
Allaire frequently testifies before Congress, calling for stricter regulations that would come at the expense of USDT but benefit Circle. Last year, a senior aide of Allaire urged lawmakers to target USDT, citing its use in terrorist financing. The Wall Street Journal reported last October that the U.S. Department of Justice and the Treasury were investigating whether USDT might have violated financial crime laws.
Allaire stated in an interview, "We want USDC to be the preferred digital dollar."
Circle's cryptocurrency company founder Jeremy Allaire
In contrast, Devasini avoids the spotlight and rarely speaks in public. The 60-year-old has been the nominal CFO of USDT, and on Monday, the company announced he would transition to chairman. In reality, he has been in control of the company's operations—despite his business card stating "no title, no job, nothing." According to colleagues, behind the scenes, he hopes allies like U.S. Secretary of Commerce Howard Lutnick, whose company Cantor Fitzgerald holds a substantial amount of USDT Treasury reserves, will help quash the hostile legislation supported by Circle. Lutnick resigned from his position at Cantor Fitzgerald after taking a cabinet position in the Trump administration in February.
Both companies declined to comment directly on each other. Allaire stated that Circle is not focused on "an unregulated currency world," but rather the entire legitimate digital currency market worth $100 trillion. In February, when a cryptocurrency YouTuber asked Devasini's deputy Paolo Ardoino about Circle, he smiled and replied, "You mentioned that name; I didn't."
USDT has repeatedly denied aiding criminals and stated that it cooperates with law enforcement.
Let the Dollar Scream
Devasini is Italian, and his career has been varied. He initially worked as a plastic surgeon in Milan before moving to Hong Kong to import electronics. In 1995, Italian prosecutors accused him of being involved in a software piracy ring and committing fraud. Devasini reached a plea agreement with authorities and paid Microsoft a settlement.
Later, he became involved in the emerging cryptocurrency industry and discovered an opportunity about ten years ago. Cryptocurrency companies were unable to connect their digital currencies to the real-world banking system.
Paolo Ardoino is one of Devasini's main deputies and often represents USDT in public.
USDT was launched in 2014, registered in the British Virgin Islands, to address this issue. Traders can exchange their real-world currency for USDT, pegged to the dollar, and almost instantly convert this stablecoin into other tokens via blockchain.
In Devasini's view, USDT is designed to disrupt traditional finance. His wife is an artist, and in her exhibited paintings, George Washington on the dollar bill is screaming, as she believes the dollar "is no longer valuable."
Allaire's mission is different. The 53-year-old American is a seasoned Silicon Valley entrepreneur who served as CTO at software company Macromedia, which pioneered Flash animation technology. Allaire founded Circle in Boston a year before USDT was launched, hoping to create a new financial system for the internet age to improve the inefficient and convoluted banking networks that often lead to problems with international payments.
Hemant Taneja, CEO of venture capital firm General Catalyst, stated that while most members of the cryptocurrency community favor an unregulated market, Allaire's strategy of working with regulators to grow Circle is ironically a "reverse bet."
Taneja and other prominent American investors, including venture capitalist Jim Breyer, known for early investments in Facebook, have all backed Allaire's vision. Goldman Sachs, BlackRock, and Fidelity, as well as cryptocurrency exchange Coinbase, later invested as well. Allaire remains Circle's largest individual shareholder.
When Allaire sought a money transmission license, regulators were skeptical. In this young and untested industry filled with fraudsters, he quickly earned the reputation of being "the most reliable adult in the room." At the end of 2013, Allaire testified before Congress for the first time, urging the U.S. to take the lead in setting regulatory measures for cryptocurrency to prevent criminal activity.
Breyer said, "He is the most formidable person I know when it comes to dealing with senior politicians in Washington."
In 2020, as cryptocurrency trading went mainstream, Circle and USDT began mutual accusations.
In January of that year, Allaire tweeted, "The biggest feature of USDT is its non-compliance and opacity." He pointed out that USDT had become the choice for those wanting to bypass the financial system.
Circle issued warnings in letters to authorities in the U.S. and elsewhere about the potential harm unregulated stablecoins could cause consumers. In July of the same year, Circle pointed to an incident from two years prior when a large amount of USDT was seized by authorities during a money laundering investigation, causing it to temporarily lose its peg to the dollar. Circle stated that this indicated that such stablecoins could encounter problems, rendering consumers' cryptocurrency assets worthless.
Circle promotes its transparency and released audited financial statements in 2021. It later hired Deloitte to audit comprehensive monthly reports covering USDC reserves, which are primarily composed of U.S. Treasury bonds, along with some short-term Treasury loans and cash.
In contrast, the financial statements released by USDT are much more concise and were published only under the compulsion of New York state regulators. USDT also includes Bitcoin, commercial loans, gold, and other unspecified investments in its supplemental Treasury reserves.
The Wall Street Journal reviewed information showing that Devasini complained to partners about unfair comparisons with Circle. He referred to USDC as "garbage coin" and stated that due to reputational issues, auditors were unwilling to work with USDT, also claiming that someone was spreading rumors about his company online.
"Shifting to Quality Assets"
After years of lackluster returns, in 2022, USDT and Circle unexpectedly received a massive influx of funds. As the Federal Reserve raised interest rates, the returns on U.S. Treasury bonds held by USDT surged from tens of millions of dollars annually to hundreds of millions of dollars quarterly.
A monitoring screen in Hong Kong displays the prices of various cryptocurrencies, including USDT and USDC.
Devasini hardly spends this unexpected fortune on himself. He often attends meetings in worn-out sportswear and a hat that reads "Fool," with a string of keys and storage devices hanging from his shoulder strap. Nevertheless, he enjoys boasting to peers about how much USDT earns daily.
He also feels that his newfound wealth has made him a target. In December of that year, at a conference in the Bahamas, Devasini told a business partner that he believed USDT posed a threat to the U.S.-dominated international banking order, and that the White House might attempt to shut down USDT at any moment.
Meanwhile, Allaire was deepening ties with the traditional financial world. By the end of 2022, Circle had most of its reserves held at the world's largest custodian bank, BNY Mellon, with some cash stored at other regulated financial institutions. BlackRock managed its U.S. Treasury bond portfolio.
Sources familiar with USDT revealed that the company is primarily managed by Devasini and a small group of similarly industry outsiders, including the combative Italian programmer Ardoino. In contrast, Circle has hundreds of employees and a board composed of former corporate executives.
As USDC gradually caught up with its competitor, Allaire tweeted about "shifting to quality assets," implying that traders were abandoning USDT in favor of USDC.
However, when Silicon Valley Bank collapsed in March 2023, Circle found itself in trouble, with over $3 billion in cash reserves trapped there. Panicked traders sold off USDC, causing its price to drop to 87 cents.
USDT seized the opportunity to rub salt in Circle's wounds, proclaiming that it was unaffected by the collapse of Silicon Valley Bank. As traders rushed back to USDT, Ardoino retorted on Twitter, "Shifting to safe assets."
After regulators rescued Silicon Valley Bank, USDC regained its peg to the dollar. Over the remaining months of that year, approximately $20 billion flowed out of USDC.
Ardoino warned that people should "truly be wary" of stablecoin companies like Circle that store reserves in uninsured cash deposits, saying this made USDC vulnerable during bank failures, despite USDT having experienced a similar incident of funds being seized years earlier. Allaire stated that Circle needed to keep a small portion of its cash reserves outside of BNY Mellon and other major global banks to provide redemption services for customers.
In June of that year, Allaire petitioned Congress for a stablecoin bill that would impose strict reserve requirements and allow issuers to hold cash at the Federal Reserve. He launched a fierce attack on USDT, calling for measures to ban the circulation of digital dollars issued abroad that "do not comply with U.S. rules." He stated, "Worst of all, they are undermining America's national interests and security."
He and his aides traveled worldwide—Japan, Singapore, the EU, Brazil—advising governments in other countries to draft stablecoin-related laws and signing agreements with foreign banking partners to enable local Circle customers to transact directly with regulated institutions.
Circle's Progress
Last year, in his home in Lugano, Devasini felt uneasy about the increasingly stringent legal restrictions, stemming from both the growing regulatory measures and the accusations of USDT being used for criminal activities.
According to Lugano's mayor, Michele Foletti, this Swiss town is a "sanctuary" for him to escape the outside world. Devasini often works in a modest office above a sports bar and dines with Foletti at a restaurant that serves Bitcoin-themed Italian bread. Devasini's wife unveiled a statue of Bitcoin's anonymous founder, Satoshi Nakamoto, in a park by the lake.
Devasini told partners that he would not go to the U.S. In a chat group, he inquired about the fate of Kim Dotcom, the founder of the now-defunct file-sharing site Megaupload, as the U.S. Department of Justice was attempting to extradite him on piracy charges.
In April 2024, the U.S. Treasury specifically pointed out that USDT was being used to fund Russia's war machine. In June, slogans like "USDT linked to corruption" appeared on billboards in Washington, D.C., and Times Square in New York. This was part of a campaign initiated by an advocacy organization aimed at raising awareness of USDT's use by terrorists and drug trafficking groups. The organization labeled the USDT company as "the next FTX."
Devasini believes that Circle is behind this push. He told a business partner, "Every attempt to slander USDT has them behind it."
Ardoino later publicly accused USDT's competitors of funding the advocacy organization's activities. The organization, called "Consumer Research," had previously launched campaigns against environmental, social, and corporate governance investments and stated that it never discloses the identities of its donors.
Circle declined to comment on this.
However, sources familiar with the discussions revealed that throughout 2024, Circle executives frequently met with senior officials at the U.S. Treasury and other authorities, pointing out the national security risks posed by USDT. In February of that year, during a congressional hearing, when asked about USDT, Circle's senior policy director expressed her hope that U.S. authorities would investigate how USDT facilitated "malicious activities."
These sources indicated that the U.S. Treasury was very concerned about the widespread use of USDT among enemies of the U.S. and was even considering whether to impose sanctions on USDT itself. This would exclude USDT from the U.S. banking system and likely lead to its business's demise. The Treasury also sought new powers from Congress to combat offshore stablecoins backed by the dollar, specifically targeting USDT, although these powers were not approved.
In April, Democratic Senator Kirsten Gillibrand of New York and Republican Senator Cynthia Lummis of Wyoming introduced a bill that would ban unregulated stablecoins. Lummis stated at the time, "If I had to choose, I would choose USDC over USDT."
U.S. Senator Cynthia Lummis proposed a bill to regulate cryptocurrencies.
Under the new regulations, Circle also obtained a license to operate in the EU, which requires stablecoin issuers to hold at least 30% of their cash reserves in local banks. USDT opposed this condition, arguing that it would increase risks, citing the collapse of Silicon Valley Bank as an example. In response, Coinbase and other exchanges delisted USDT in the EU.
Another victory for Circle came in December of last year when the world's largest cryptocurrency exchange, Binance, partnered with it to promote the use of USDC. For years, this once freewheeling exchange had been the center of USDT trading. However, after Binance admitted to violating U.S. financial crime laws at the end of 2023, it also sided with Allaire.
A New Government
Devasini holds a trump card: Commerce Secretary Lutnick, whose company Cantor Fitzgerald holds USDT's Treasury reserves.
Lutnick personally negotiated a deal for Cantor to invest in Tether's holding company through convertible bonds in April 2024. After meeting with Lutnick in Lugano the following month, Devasini told colleagues that Trump's ally would seek to veto any legislation that could harm Tether. Devasini added that Lutnick also did not like Circle.
The U.S. Department of Commerce did not respond to requests for comment. A Cantor spokesperson declined to comment.
Sources close to Lutnick said he helped Devasini establish connections with Trump's camp. A month after Trump's victory, Tether invested $775 million in a stake in the conservative streaming platform Rumble, with Cantor handling the deal. Rumble's CEO, Chris Pavlovski, is a close friend of Donald Trump Jr., and he stated on Twitter that Tether was spreading "American freedom."
In February of this year, President Trump met with Howard Lutnick in the office, and days later, he was appointed Secretary of Commerce.
During Lutnick's confirmation hearing, senators pressured him to explain the potential conflicts of interest that Tether might bring. He claimed that criminals used Tether more than USDC simply because Tether had a larger market. "It's like blaming Apple because criminals use iPhones," he said.
When Washington State Democratic Senator Maria Cantwell asked Lutnick whether he would undermine any legislation regulating Tether, Lutnick replied that he had repeatedly expressed his belief that Congress should be careful not to undermine "the dollar's dominance on the blockchain," indicating that Congress should not create overly burdensome legislation for companies like Tether to avoid losing market share.
He did not commit to not interfering with any federal investigations into Tether, only writing that he would fulfill his duties in accordance with government ethics laws. Regarding his previous discussions with Devasini, Lutnick wrote, "I have never suggested to anyone that I would do anything improper regarding Tether."
Trump issued an executive order aimed at promoting "legitimate dollar stablecoins globally." The order established a presidential cryptocurrency working group, which included Lutnick, to review regulations that should be repealed or modified.
After Lutnick left Cantor, his son Brandon Lutnick was appointed chairman of the company; Brandon Lutnick had previously interned at Tether in Lugano.
Meanwhile, Circle donated $1 million to a super PAC supporting cryptocurrency-friendly candidates and $1 million to Trump's inauguration committee.
Senator Kirsten Gillibrand helped propose a bill that she said would allow legitimate cryptocurrency companies to compete in a fair market.
In February, Lummis and Gillibrand, along with two Republican senators, introduced a new stablecoin bill, which Allaire publicly welcomed, and the House also proposed similar legislation. Gillibrand stated in an interview that this legislation would allow legitimate cryptocurrency companies to compete in a fair market "without being disadvantaged or undermined by scammers lacking safety standards and transparency."
She added, "I don't think Tether currently meets the requirements."
Since USDT was delisted from some exchanges in mid-December, its growth has begun to slow.
Circle's stock price soared, and by early February, the total value of USDC finally surpassed pre-Silicon Valley Bank levels. The company is set to move into its new headquarters at the World Trade Center in New York.
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