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JPMorgan Explains the Trouble at the Helm of Tether: "May Have to Sell Bitcoin!" - Coin Bulletin
It is mentioned that a part of Tether's (USDT) reserves is compliant with the proposed stablecoin regulations in the US, while JPMorgan suggested that the company may have to sell Bitcoin.
The U.S. House of Representatives and the Senate have introduced two new bills on the stablecoin market. The first is the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) in the House of Representatives, and the other is the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) in the Senate.
JPMorgan analysts emphasized that if the STABLE Act goes into effect, only 66% of Tether's reserves will comply with this regulation, while under the GENIUS Act, 83% will be compliant. These rates are on a downward trend due to an increase in stablecoin supply from mid-2024.
The risk is increasing for Tether
If the new regulations come into effect, Bitcoin, precious metals, corporate bonds, and collateralized loans in Tether's reserves may become incompatible with the law. The U.S. government may require stablecoin issuers to substantially back their reserves with U.S. Treasury bonds, bank deposits, and highly liquid assets. This could mean that Tether will have to sell its holdings of Bitcoin and other alternative assets.
Tether, which has been delisted in Europe due to similar regulations, may come under greater pressure in the face of the new legal framework in the United States. In particular, given Tether's around 60% share of the stablecoin market, the impact of potential regulations on the market could be huge. JPMorgan analysts noted that the U.S. bringing more transparency and oversight to the stablecoin market will create new challenges for Tether.