Tether's Bitcoin Holdings at Risk: US Stablecoin Regulations Loom

Tether, the issuer of the world's largest stablecoin, may need to divest a portion of its $8 billion Bitcoin holdings to comply with proposed US stablecoin regulations, according to JPMorgan analysts. The STABLE and GENIUS Acts, if passed, would require stablecoin issuers to ensure their reserves are sufficiently backed by liquid and high-quality assets. This could significantly impact Tether's reserve management and market position.

In other news, New York State Senator James Sanders Jr. introduced a bill to establish a 17-member task force to explore the status and impact of crypto and blockchain in the state. The task force aims to assess trading volumes, exchange activities, tax implications, environmental sustainability, and current regulations related to crypto, with a report due by December 15, 2027.

The Cboe BZX Exchange has filed with the US Securities and Exchange Commission (SEC) a proposal to allow staking in the 21Shares Core Ethereum ETF. This marks the first initiative by an ETF to seek approval for crypto staking from the SEC, signaling a shift towards a more crypto-friendly regulatory approach.

Robinhood, a commission-free brokerage, observed a 400% increase in crypto trading volume in Q4, reaching $70 billion. This surge reflects a continuing strong interest in crypto trading, with the firm's transaction-based revenues increasing significantly, largely driven by crypto trading which generated $358 million, up 700% from last year.

Bitwise Chief Investment Officer Matt Hougan identifies a significant opportunity in the crypto market due to contrasting sentiments between institutional and retail investors. Institutional sentiment towards crypto is highly bullish, evidenced by substantial investments, including exchange-traded funds and corporate acquisitions of Bitcoin. Meanwhile, retail sentiment is at a low, affected by poor performance in altcoin investments compared to Bitcoin. Despite current retail pessimism, Hougan is optimistic about the long-term prospects for altcoins, highlighting potential regulatory clarity and the role of stablecoins as factors driving future growth.

The US Consumer Price Index (CPI) in January 2025 recorded a higher than anticipated annual increase, reaching 3%, a significant rise from the previous value of 2.9%. Core CPI, excluding food and energy, also saw a year-over-year rise to 3.3%. On a monthly basis, the