The allure of Tether’s USDT compared to other stablecoins is likely to diminish as forthcoming US regulations demand greater transparency and adherence to new KYC/AML standards, according to JPMorgan. This was reported by CoinDesk, citing an analyst report.
Although Tether operates outside the United States, regulators can exert “some control” over the offshore use of the issuer’s “stablecoins” through the OFAC, the document states.
The US Congress is currently reviewing the Stablecoin Transparency Act, while partial implementation of MiCA is expected in the EU in June.
“While direct legal actions against offshore companies and decentralized firms are challenging, indirect measures and international cooperation could potentially hinder the use of Tether,” the analysts wrote.
JPMorgan believes that stablecoin regulations will be coordinated globally through the Financial Stability Board within the G20 framework. This situation will further limit the capabilities of unregulated “stablecoins” like USDT.
Tether periodically reports on the reserve backing of its assets, but analysts believe the level of disclosure is insufficient to “dispel concerns.”
Previously, JPMorgan pointed out the growing dominance of USDT as a negative factor for the stablecoin market and the crypto ecosystem as a whole.
In the fourth quarter of 2023, Tether achieved a record net profit of $2.9 billion.
Since December 1, the issuer has been freezing wallets linked to the SDN list of the US Treasury’s Office of Foreign Assets Control. The company also highlighted its assistance to agencies such as the Department of Justice, the Secret Service, and the FBI.
Earlier, Tether expressed disappointment with the UN’s assessment of USDT’s use in illegal activities and the disregard of the asset’s role in developing economies.