Tether's Bitcoin Sell-off Looms as US Stablecoin Rules Tighten

US Stablecoin Regulations May Force Tether to Sell its Bitcoin

Tether, the world's leading stablecoin issuer, is facing potential regulatory challenges that could force it to sell a significant portion of its Bitcoin holdings. According to a report from JPMorgan, Tether may need to comply with proposed US stablecoin rules by selling its Bitcoin and other commodities. However, Tether's CEO, Paolo Ardoino, disputed this claim on social media without addressing the core concerns.

The US is pushing for new stablecoin regulations, which would include strict accounting and secured reserves. Tether has not complied with similar regulations in Europe, but it cannot afford to lose the US market. The proposed regulations could force Tether to sell its Bitcoin to meet the new requirements.

Tether reported record-high profits last quarter, despite regulatory challenges. The firm is also exploring new market opportunities by relocating to El Salvador. However, a JPMorgan report claims that Tether may have to sell a significant portion of its Bitcoin to comply with US regulations.

Tether's CEO, Paolo Ardoino, dismissed the JPMorgan report on social media, but he did not address the core concerns. The analysts identified that the new US stablecoin regulations would compel Tether to offload its Bitcoin reserves. Several stablecoin bills are currently proposed to the Senate, and most of them advocate for issuers to hold their asset reserves in the US.

The most likely bill to be passed is the 'GENIUS Act' proposed by Tennessee Senator Bill Hagerty. The bill's standards show that only 83% of Tether's reserves are in compliance, and other proposed bills are more aggressive. US stablecoin regulation is coming, and these efforts have bipartisan support. Federal Reserve Chair Jerome Powell also strongly supports these regulations.

Why would these proposed regulations compel Tether to sell its Bitcoin? Essentially, they would entirely change the way the company handles its reserves. The company would need to store a significant portion of its total cash reserves in US Treasury bonds or other insured institutions. This framework does not entirely support the decentralization of stablecoin issuers.

Last December, Tether was largely kicked out of Europe because it could not meet similar requirements under the new MiCA framework. Tether could handle losing the EU, especially because it prepared, but US crypto exchanges are also ready to drop the