The world's largest stablecoin issuer, Tether, is reportedly being investigated by U.S. authorities — and is also being supported by Trump's transition team co-chair.

It's an interesting battle that has been brewing as Tether has continued its dominance and grown to become one of the largest holders of U.S. Treasuries in the world. Most of those holdings — some $80 billion, according to the Wall Street Journal — are held in custody by Cantor Fitzgerald, the Wall Street powerhouse run by Howard Lutnick.

Lutnick, also now Trump's transition co-chair, has openly championed Tether as the premier digital dollar even as questions about reserves have swirled. With the Journal's report of a new probe looking at possible violations of anti-money-laundering and sanctions rules, the election could heavily impact what happens for Tether under the next administration.

Considering Tether's market cap of more than $120 billion, the stakes are extremely high. For its part, the company told the Journal it was unaware of any probe.

“To suggest that Tether is somehow involved in aiding criminal actors or sidestepping sanctions is outrageous," a company spokesperson said. “We work actively with U.S. and international law enforcement to combat illicit activity, as we’ve publicly demonstrated many times.”

That is something Lutnick has tried to trumpet before, including during a speech at the Bitcoin Conference in Nashville this summer.

"Tether will seize any amount of coin that is involved in illicit activity. They will be caught, so whoever said things about Tether, they're knowingly false, they know it's wrong and it needs to go away," he said.

If Trump wins, it's interesting to think about Lutnick setting the stablecoin regulation agenda and how that could benefit Tether's goals, or at least lift some of the regulatory pains the company has suffered.

In Europe, stablecoin legislation is already challenging certain issuers. The so-called Markets in Crypto-Assets Regulation (MiCA) framework is the first comprehensive regulatory framework for stablecoins and will take effect at the end of the year.