Tether’s CEO Paolo Ardoino recently slammed analysts from JPMorgan, who suggested that the stablecoin issuer would need to part ways with some of its Bitcoin (BTC) holdings.
These analysts, led by JPMorgan strategist Nikolaos Panigirtzoglou, claimed that this is the only way for the issuer to comply with proposed stablecoin regulations in the United States.
Tether in Non-compliance With STABLE and GENIUS
In the report published by this team of analysts, Bitcoin was categorized as a non-compliant asset, alongside some precious metals.
This classification was defined in relation to a discussion draft submitted by US Representatives French Hill and Bryan Steil less than a week ago.
The bill, dubbed Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, seeks to establish a regulatory framework for dollar-pegged payment stablecoins in the U.S.
Also, the bill seeks to prohibit issuers from creating self-issued digital assets-backed stablecoins.
It also aligns with Trump administration’s plan to regulate and bring stablecoins onshore. Even the White House Crypto Czar David Sacks once stated that stablecoins could “extend the dollar’s dominance internationally.”
On this premise, the JPMorgan analysts concluded that Tether may not stand a chance with its Bitcoin holdings.
Meanwhile, the said stablecoins bill is yet to be finalized. Responding to these claims, Paolo Ardoino said the analysts are ‘Salty’ because they did not own any Bitcoin.
Stablecoin Records Traction Globally
Generally, it is obvious that the stablecoin sector is gaining traction across several nations, underscoring the recognition of its utility over other forms of crypto assets.
This growth has necessitated regulators and policymakers to establish a regulatory framework for the sector.
In the first week of February, US Senator Bill Hagerty came up with the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
This is designed to establish a federal licensing and supervisory framework for stablecoins and their issuers.
There is a significant alignment between the STABLE and GENIUS Acts.
However, under the former, issuers can only hold insured deposits, US T-bills, short-term Treasury repos and central banks reserves.
Tether’s Market Dominance Under Threat
Such a situation invariably threatens Tether’s position in the cryptocurrency market.
Till now, this stablecoin issuer remains the largest stablecoin firm, seconded only by USDC issuer Circle.
Towards January end, the company announced that it logged a total of $13 billion net profit and $20 billion-plus group equity in 2024.
In addition, it was reported that USDT experienced a significant expansion, releasing as much as $45 billion worth of tokens into the market in 2024.
Markedly, Q4 2024 saw the largest portion of its issuance pegged at $23 billion due to increasing demand for stable digital currency.
However, its issue with complying with regulatory frameworks is becoming a concern amongst the crypto community. This is based on the composition of its reserve
In Europe, the Markets in Crypto Assets (MiCA) legislation became effective on December 30.
MiCA was the region’s way of ensuring greater transparency, security and resilience in the cryptocurrency market.
While Circle immediately took the required steps to comply with the new rules, Tether pointed out the ‘supposed’ flaws with the framework.
Considering its large operations, it couldn’t adjust to some terms in the MiCA rules. Not long ago, it eventually shut down operations of its Euro Tether (EURT) to focus on other regions.
