Highlights
- JP Morgan reports Tether may need to sell Bitcoin to comply with U.S. regulations.
- Two legislative proposals, the STABLE Act and GENIUS Act, are under discussion.
- Tether’s reserves are 66% compliant with the STABLE Act and 83% with the GENIUS Act.
A recent report from JP Morgan, the world’s largest bank, has made startling revelations about Tether, the USDT issuer.
The report suggests that Tether may need to sell some of its Bitcoin reserves to comply with potential new U.S. regulations on stablecoins.
Meanwhile, analysts are led by a JP Morgan strategist, Nikolaos Panigirtzoglou. Who highlighted in their February 12th report that a significant portion of Tether crypto’s current Bitcoin reserves might not meet the forthcoming regulatory standards.
His report further shows that given the Tether status as the largest stablecoin issuer, the analysts emphasized that selling Bitcoin could be essential for compliance with proposed U.S. regulations.
In response, Tether’s CEO, Paolo Ardoino, criticized JP Morgan’s analysts, he slammed by calling them “salty” due to their lack of Bitcoin ownership.
Also, Tether has also denied the claims made by JP Morgan regarding its Bitcoin reserves and its ability to adhere to upcoming stablecoin-based U.S. regulations.
While Tether has acknowledged the ongoing discussions about the proposed legislation, but it remains uncertain about which bill, if any, will progress. Keep reading to know more.
Tether — an Important Thread Holding Crypto Market
As it is evident that Tether crypto comes in a stablecoin category, but it has grabbed most of the market as a 1:1 pegged currency with USD.
It has grown exceptionally, now commands approximately 62% of the $230 Billion stablecoin market, and boasts a flagship token, USDT, with a market cap of $141.81 Billion.
Recently, the company reported an impressive $13 Billion profit for its 2024 fiscal year and currently holds around 83,760 BTC.
Per data, it has been found that Tether crypto began accumulating Bitcoin reserves in the third quarter of 2022, and as of now, it has realized a profit of $5.04 Billion from the price change. Overall, its total balance amounts to $8.125 Billion in reserves.
With its significant presence, Tether crypto has played a crucial role in propelling the crypto market to new heights.
It holds a dominance of 4.41% and ranks fourth among the top 5 assets, just behind XRP. Tether crypto’s influence remains a vital thread in the fabric of the cryptocurrency ecosystem.
JPM: Tether in Non-Compliance with Both STABLE and GENIUS ACT
Donald Trump is focussing on crypto-tech and wants comprehensive regulations as fast as possible.
Therefore, discussions are ongoing surrounding stablecoin-based U.S. regulations, where two legislative proposals are at the forefront.
The first, known as the GENIUS Act, was introduced by Senator Bill Hagerty. The second, a counterpart to the GENIUS Act, is the STABLE Act, introduced by House Financial Services Committee Chairman French Hill and Representative Bryan Steil.
Following these developments, JP Morgan’s analysts released a report categorizing Bitcoin as a non-compliant asset alongside certain precious metals.
Even the White House Crypto Czar David Sacks has previously stated that stablecoins could “extend the dollar’s dominance internationally.”
In light of this, JP Morgan’s analysts added more to the report and expressed concerns that Tether crypto may struggle due to its Bitcoin reserves.
According to the JP Morgan report, Tether crypto’s reserves are 66% compliant under the STABLE Act and 83% compliant under the GENIUS Act. This indicates that adjustments would be necessary if either act is finalized.
While these stablecoin bills have yet to be finalized and currently have no immediate impact on Tether crypto, they still create a wave of uncertainty in the market. In response to these claims, Tether’s CEO, Paolo Ardoino, did not hold back.
He criticized JP Morgan’s analysts, stating that even in a worst-case scenario, Tether’s group equity exceeds $20 Billion in highly liquid assets and generates over $1.2 Billion in quarterly profits from U.S. Treasuries, excluding other investments and activities.
Additionally, he concluded by stating that Tether employs one of the best risk management strategies in the industry and slammed JP Morgan’s negative stance which may have generated from “missing the Bitcoin train.”
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.
