Tether May Need to Sell Bitcoin to Meet Proposed US Stablecoin Rules, Says JP Morgan
“Under the proposed bills, Tether would have to implicitly replace its non-compliant assets with compliant assets,” the report reads
Stablecoin giant Tether may have to sell some of its Bitcoin in order to comply with proposed U.S. regulations, according to a report from the world’s biggest bank, JP Morgan.
In a Wednesday report, the banking giant said that under potential new regulations in the U.S. seeking to keep a close watch on stablecoin issuers, a significant chunk of Tether’s current reserves would not be compliant.
Tether is the biggest issuer of stablecoins, or cryptocurrencies backed by less-volatile assets. Stablecoins are typically tied to gold, dollars, or the euro so that traders can easily enter and exit trades.
“Under the proposed bills, Tether would have to implicitly replace its non-compliant assets with compliant assets,” the report reads.
“This would imply sales of their non-compliant assets (such as precious metals, Bitcoin, corporate paper, secured loans and other investments) and purchases of compliant assets such as T-bills,” it added. “U.S. stablecoin regulations requiring more transparency and frequent reserve audits pose additional challenges to Tether.”
However, the proposed regulations could change as the legislation isn't final, and could shift before being voted on.
"Tether is closely monitoring the evolution of the different U.S. stablecoin bills and also actively engaging with local regulators," a spokesperson told Decrypt. "Consultation from the industry needs to happen, and it’s still unclear which bill will move forward."
Furthermore, Tether is not based in the U.S.—it recently relocated to El Salvador from the British Virgin Islands—so whether or not it would have to comply with American regulators remains unclear.
