U.S. Stablecoin Rules May Prompt Tether to Sell Bitcoin, JPMorgan Predicts

Tether may face challenges in meeting new U.S. stablecoin regulations, potentially needing to liquidate some of its non-compliant assets, including bitcoin, to align with the proposed rules, according to a recent report by JPMorgan.

The Senate’s GENIUS Act and the House’s STABLE Act are both set to impose stricter regulations on stablecoins with a market cap exceeding $10 billion. The GENIUS Act suggests federal oversight, while the STABLE Act focuses on state-level control. Both bills require that stablecoins be backed by highly liquid, high-quality assets, such as U.S. Treasury bills.

As the leading stablecoin issuer, Tether holds around 60% of the market share, with a market cap of approximately $142 billion. However, JPMorgan’s report indicates that Tether’s reserves are only 66% compliant under the STABLE Act and 83% compliant with the GENIUS Act. This discrepancy means Tether may need to sell non-compliant assets like bitcoin, corporate bonds, and precious metals to purchase more compliant assets like T-bills.

The report highlights a decrease in Tether’s compliance ratio since mid-2024, partly due to the surge in stablecoin supply. As a result, Tether would need to replace non-compliant reserves with U.S. government-backed securities if the regulations pass.

Despite these hurdles, Tether’s spokesperson assured that the company is working closely with regulators to understand the evolving landscape and prepare for any changes. They also pointed out that Tether’s substantial holdings in liquid assets, including over $20 billion in U.S. Treasuries, will likely help the company navigate the new rules with ease.

Tether’s CEO, Paolo Ardoino, took to social media to dismiss the JPMorgan report, suggesting that the bank’s analysts are envious of Tether’s bitcoin holdings. Additionally, the report mentioned that the proposed regulations could impose further operational challenges for Tether, particularly around the need for increased transparency and more frequent reserve audits.