Investing in an Age of Control: Stablecoins, Sanctions, and the Risks of Regulation

In Rule #1 investing, we’re always looking for wonderful companies on sale. But sometimes, the biggest opportunities—and threats—don’t come from quarterly earnings or product launches. They come from headlines. Shifts in regulation, monetary policy, or geopolitical power can ripple through the economy and change the way investors find value.

I was reading up on something that caught my eye in the Wall Street Journal: a stablecoin called Tether is quietly moving $190 billion a day, rivaling the daily volume of Visa. That’s not just a tech story—that’s a Rule #1 investor story.

Let’s break down why Tether, taxes, and tech giants could change the way you think about investing in 2025 and beyond.

Why Rule #1 Investors Should Watch the Headlines

Some of my best investments didn’t come from analyst recommendations. They came from headlines.

• Chipotle after the E. coli scare.

• BP during the Deepwater Horizon oil spill.

• CF Industries when the nitrogen fertilizer market crashed.

These events spooked Wall Street—but they opened doors for value investors like us. That’s the power of mispricing. When fear drives price far below value, that’s where we find our margin of safety.

The opportunities I found in reading usually come in the form of some headline that a company is getting slammed.

What Is Tether—and Why Should Investors Care?

Tether is a stablecoin—a cryptocurrency pegged 1:1 to the U.S. dollar and backed by U.S. Treasury bonds. It’s not just a tech gimmick. Tether moved almost $190 billion per day in 2023. That’s real money being moved outside the traditional financial system.

Why do people use it?

• To bypass sanctions (Russia, Venezuela, Iran)

• To escape inflation (Argentina, Turkey)

• To store value in countries with unstable currencies

Tether’s rise signals a growing lack of faith in centralized, regulated systems. It’s a red flag—and a potential investing insight.

The Dark Side of Stablecoins

Tether isn’t without risk. It’s used by:

• Drug cartels

• Fraud rings

• Terrorist organizations

While Tether claims it can freeze wallets and track transactions, it’s often one step behind. Of $153 billion flagged for illegal use, only $1.4 billion was frozen. That’s less than 1%.

For investors, this raises questions:

• What happens if the U.S. bans Tether from buying Treasuries?

• What if regulators treat it like a threat to national security?

• Could it all collapse?

Maybe. But maybe that’s the point—people are moving their money into places where government can’t reach.

Taxes, Regulation, and Capital Flight: The New Investor Risk

There has been serious talk of a 25% wealth tax on anyone worth more than $100 million. In the past, people stayed and paid. But now? They leave. France tried a tax like this—and the wealthy just moved.

Digital assets like Tether may be a preview of how capital moves when governments overreach. As investors, we have to ask:

• Could this trigger a long-term exodus of U.S.-based capital?

• What does that mean for the companies we own?

Should Companies Stay Loyal to Their Country?

Apple used Ireland as a tax shelter for years. Now, the EU wants $14.4 billion back. Apple says it followed the rules. Ireland agreed. But the rules changed.

That’s a key investing risk: governments can change the rules mid-game.

As a shareholder, do you want your company to:

• Maximize profits at all costs?

• Stay loyal to their country of origin?

There’s no perfect answer—but it’s a question every multinational must face.

Big Tech on Trial: When Bigness Becomes a Liability

For years, it felt like the biggest tech companies were untouchable. But that era may be ending. The U.S. government has actively pursued antitrust cases against companies like Alphabet, Apple, and Amazon.

Alphabet has been accused of monopolizing digital ad markets and manipulating search results. Apple faces lawsuits over App Store practices. Amazon is under scrutiny for allegedly stifling third-party sellers and inflating prices.

As investors, we have to ask:

• What happens when regulators step in to reshape the business model of a company we own?

• Are we holding giants that could face forced breakups—or fines in the billions?

Bigness once meant pricing power, dominance, and predictability. Now, it can also mean headline risk, political attention, and unpredictable litigation.

Rule #1 investors should weigh these risks carefully. Sometimes the moat that made a company great becomes the very reason it’s under attack.

What It All Means for Rule #1 Investors

Here’s what I take away from all this:

• Headlines matter. That’s where we find opportunity.

• Regulation is a moat risk. When governments shift gears, it affects companies’ pricing power and predictability.

• Currency alternatives aren’t going away. Whether you like it or not, they’re a response to real fears.

Stay informed. Stay skeptical. Stay focused on buying wonderful companies at attractive prices.

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