JPMorgan Outlines Conditions for Tether’s Compliance with US Regulations

Tether may need to sell its Bitcoin holdings to comply with proposed US stablecoin regulations, according to JPMorgan, as reported by The Block.

Analysts estimate that only 66%-83% of USDT reserves meet the requirements.

The experts’ conclusions are based on the proposed Stablecoin Transparency and Accountability for Better Economic Spreadsheet (STABLE) Act in the House of Representatives and the Guidance and National Innovation for US Stablecoins (GENIUS) Act in the Senate.

If either of the two documents is passed, the issuer will face the necessity of divesting from Bitcoin and other non-compliant instruments such as gold, corporate bonds, and secured loans in favor of US Treasuries and other liquid and reliable assets.

Currently, Tether holds 83,758 BTC (~$8.04 billion).

JPMorgan believes that the approval of one of the two bills could ultimately undermine the company’s dominant position in the US.

“US regulations imply greater transparency and regular reserve audits, which pose additional challenges for Tether,” they concluded.

The stablecoin regulatory framework is expected to be adopted by the end of the year.

In 2023, Tether announced regular investments in the leading cryptocurrency.

In February 2024, the company reported plans to develop an AI application for Bitcoin wallets.