USDT issues Tether could face challenges if the proposed US StableCOin regulation has been adopted and the company may need to sell some of its reserves to comply with the new rules, Wall Street Bank JPMorgan (JPM) said in a research report Wednesday.
Senate’s guidance and the establishment of the National Innovation for US StableCecoins (Genius) Act mandates Federal regulation for stablecoins with a market capital of more than $ 10 billion, noted the report, with the potential of state regulation, if in accordance with federal rules. The House of Representatives, Stable ACT calls for state regulation without any conditions.
“Reserve requirements according to the stable law are stricter, allowing insured deposits, US T-bills, the tax chamber short-term repo and central banks reserves,” analysts led by Nikolao’s Panigirtzoglou, adding that the Senate’s bill also allows money market funds and reversed repos.
“Both bills only allow high quality and liquid assets as reserves,” the authors wrote.
Tether dominates the StableCOin universe with a market share of 60%. USDT has a market capital of approx. $ 142 billion. JPMorgan said the issuer’s reserves are “only 66% compatible under the stable law and 83% under the Genius Act,” with reference to the company’s reports.
Furthermore, “both figures suggest a declining compliance relationship since the middle of last year when the stablecoin supply increased,” the bank added.
According to the proposed regulations, Tether should need to replace non-compatible assets with compatible, the report said. This involves “the sale of their non-compatible assets (such as precious metals, Bitcoin (BTC), corporate paper, secured loans and other investments) and the purchase of compatible assets such as T-bills.”
“Tether is closely monitoring the development of the various US StableCOin bills and also actively engages with local regulators. Consultation from the industry must be done, and it is still unclear what bill will move forward,” said a Tether spokesman IE email -Toms.
“Even in the most extreme scenario discounts JPMorgan that Tether’s Group Equity is over $ 20 billion in other very liquid assets and generates more than $ 1.2 billion in profits per quarter through US Treasury. Adaptation of new requirements will be equal, “The person added.
Tether CEO Paolo Ardoino said in a tweet on X Thursday after the publication of the bank’s report that “JPM analysts are salty because they do not own Bitcoin.”
New rules that require increased transparency and more frequent reservations can also pose additional challenges for Tether, the report added.
Read more: StableCOin rules can pose problems for Tether, says JPMorgan; USDT -Explorer claims Sur grapes
