Tether, the company behind the popular USDT stablecoin, has strongly attacked JPMorgan analysts for saying that it may need to liquidate its Bitcoin holdings in response to prospective regulatory changes in the United States.
Tether promptly denied the allegations, with a representative claiming that JPMorgan analysts “neither understand Bitcoin nor Tether.” The spokesman also noted that no stablecoin laws have been finalized, rendering such speculation premature.
Understanding the Proposed Stablecoin Bills
The regulatory environment for stablecoins in the United States is currently developing. On February 4, Senator Bill Hagerty introduced the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which seeks to establish a federal framework for stablecoin regulation. Several senators have co-sponsored this bill, including Senate Banking Committee Chairman Tim Scott.
Similarly, the House introduced the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act on February 6. This draft legislation generally conforms with the GENIUS Act, except it proposes stronger reserve requirements for stablecoin issuers. The STABLE Act defines compliant assets as insured deposits, US Treasury bills, short-term Treasury repos, and central bank reserves.
According to JPMorgan’s analysis, Tether, which currently holds over 60% of the stablecoin market, could face substantial hurdles under these new laws. Analysts projected that only 66% of Tether’s reserves would meet the STABLE Act’s criteria and 83% of the GENIUS Act’s framework. To be compliant, Tether would need to restructure its holdings, possibly selling assets such as Bitcoin.
Tether’s Response: Strong Financial Position and Industry Engagement.
Tether has assured its stakeholders that it is regularly tracking legislative changes and communicating with policymakers. The corporation noted that the draft legislation is still in its early phases and susceptible to industry feedback.
In response to JPMorgan’s concerns regarding compliance, Tether stated that it has over $20 billion in other liquid assets and earns more than $1.2 billion in quarterly income from U.S. Treasury securities. The company disregarded JPMorgan’s premise that Bitcoin sales would be required, implying that the bank’s analysts may be disappointed at missing out on Bitcoin’s price increase.
As debates over stablecoin regulation continue, Tether maintains that its reserves are sufficient and that it will adjust as needed to comply with any completed laws. Meanwhile, industry observers will be closely monitoring how US lawmakers determine the future of stablecoin regulation.
