ether Faces Tough Choices as U.S. and EU Tighten Stablecoin Rules

JPMorgan Warns Tether May Sell Bitcoin Amid Looming U.S. Stablecoin Rules
Regulatory Storm: How U.S. Laws Could Force Tether to Restructure Its Reserves
Tether’s $8B Bitcoin Holdings at Risk as Stablecoin Bills Advance in the U.S.
JPMorgan: Tether May Need to Dump Bitcoin, Metals to Stay Compliant

JPMorgan analysts have warned that Tether may be forced to sell off certain assets, including Bitcoin, precious metals, corporate paper, and secured loans, to comply with upcoming U.S. stablecoin regulations. Tether currently holds around 83,758 Bitcoin—valued at over $8 billion—which could be impacted by these regulatory changes.

New Stablecoin Laws Could Reshape the Industry
Two proposed U.S. bills—the STABLE Act in the House and the GENIUS Act in the Senate—aim to impose stricter regulatory frameworks on stablecoin issuers. These bills introduce licensing requirements, enhanced risk management protocols, and stricter 1:1 reserve backing rules.

According to JPMorgan’s report, only 66% of Tether’s reserves would be compliant under the STABLE Act, while 83% would meet the GENIUS Act’s requirements. Analysts noted that Tether’s compliance ratio has declined since mid-2024, coinciding with a surge in stablecoin supply.

Tether Also Faces Pressure in Europe
Beyond U.S. regulations, Tether has encountered challenges in Europe under the EU’s Markets in Crypto-Assets (MiCA) framework, which requires large stablecoin issuers to hold at least 60% of reserves in European banks. As a result, USDT has been delisted from multiple European exchanges. However, the impact remains limited due to Tether’s small market share in Europe.

Tether’s Financial Strength Remains Strong
Despite these challenges, Tether posted a record-breaking Q4 2024, with net profits exceeding $13 billion for the year and total group equity surpassing $20 billion. The company has also significantly increased its exposure to U.S. Treasuries, holding $113 billion, making it one of the largest buyers of U.S. government debt.

Tether also reported:
✅ $7 billion in reserve buffers
✅ $5 billion in unrealized profits from gold and Bitcoin holdings
✅ $45 billion in new USDT issuance throughout 2024

What Happens if U.S. Stablecoin Regulations Pass?
If either of the proposed stablecoin bills is enacted, Tether will likely need to adjust its reserves by shifting more funds into U.S. Treasuries and other liquid assets.

The STABLE Act enforces tighter reserve requirements and allows state-level regulation.
The GENIUS Act mandates federal oversight for large issuers but allows for a wider range of reserve assets.
Both bills introduce frequent reserve audits and transparency requirements, which could create additional challenges for Tether.
Tether CEO Stands Firm
Despite regulatory uncertainty, Tether CEO Paolo Ardoino remains confident, citing the company’s:
✔ Strong liquidity position
✔ Massive U.S. Treasury holdings
✔ Robust reserve buffer

With U.S. stablecoin regulations expected to take effect later this year, the question remains: How will Tether adapt to stay compliant?

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