Tether may face challenges if new U.S. stablecoin regulations pass, with the possibility of having to liquidate some of its holdings to comply, according to a new research report from JPMorgan.
The Senate’s GENIUS (Guiding and Establishing National Innovation for U.S. Stablecoins) Act and the House’s STABLE Act both seek to impose stricter rules on stablecoins, especially those with market caps over $10 billion. The GENIUS Act would regulate stablecoins at the federal level, while the STABLE Act calls for state-based regulations without any specific conditions. Both bills emphasize that only high-quality, liquid assets should back stablecoins.
Tether, which holds around 60% of the stablecoin market with a $142 billion market cap, currently complies with just 66% of the STABLE Act’s reserve requirements and 83% of the GENIUS Act’s, JPMorgan said. As a result, the company could face pressure to sell non-compliant assets such as bitcoin, corporate bonds, and precious metals to purchase compliant assets like U.S. Treasury bills.
The report highlights that Tether’s reserves have become less compliant over the past year as stablecoin supply surged. JPMorgan’s analysts estimate that Tether might have to make adjustments, including selling assets, to ensure compliance under the new rules.
A Tether spokesperson responded that the company is in active communication with regulators and is monitoring the progression of these bills. Tether, which holds over $20 billion in liquid assets and earns over $1.2 billion per quarter from U.S. Treasuries, believes it can easily adapt to the new requirements.
Tether’s CEO Paolo Ardoino took to social media, dismissing the JPMorgan report and suggesting that the bank’s analysts were upset because they missed out on bitcoin’s gains. The report also mentioned that Tether may face challenges due to potential increased transparency and more frequent reserve audits under the new regulations.
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