Tether May Be Forced To Sell Bitcoin To Meet Proposed U.S. Stablecoin Rules, Says JPMorgan

JPMorgan analysts have warned that Tether may need to sell off non-compliant assets, including Bitcoin, precious metals, corporate paper, and secured loans, to meet the requirements of proposed U.S. stablecoin regulations. The company currently holds about 83,758 Bitcoin, worth over $8 billion, which could be affected by these regulatory changes.

Two bills have been introduced in the U.S. to regulate stablecoin issuers. The Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act in the House and the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act in the Senate both propose licensing requirements, stricter risk management rules, and 1:1 reserve backing. JPMorgan’s report indicates that only 66% of Tether’s reserves would be compliant under the STABLE Act, while 83% would meet the requirements of the GENIUS Act. Analysts also pointed out that Tether’s compliance ratio has dropped since mid-2024, coinciding with a surge in stablecoin supply.

Beyond the U.S., Tether has also faced regulatory challenges in Europe. Under the EU’s Markets in Crypto-Assets (MiCA) framework, large stablecoin issuers must hold at least 60% of their reserves in European banks. This led to USDT being delisted from several European exchanges. However, because Tether has a relatively small market share in Europe, the impact has been limited. The U.S. market, where Tether dominates, poses a bigger challenge.

If either of the proposed U.S. stablecoin bills is passed, Tether will likely need to restructure its reserves by moving more funds into U.S. Treasuries and other liquid assets. The STABLE Act imposes stricter reserve requirements and allows for state-level regulation, while the GENIUS Act mandates federal oversight for large issuers but permits a broader range of reserve assets. Analysts believe the increased transparency and frequent reserve audits required by these regulations could create further challenges for Tether.

Despite these potential hurdles, Tether CEO Paolo Ardoino remains confident in the company’s financial strength. He emphasized that Tether’s Q4 2024 attestation highlights its position as a leader in transparency and liquidity, pointing to its massive U.S. Treasury holdings, strong reserve buffer, and $45 billion in new token issuance over the year.

The proposed U.S. stablecoin regulations are expected to be enacted later this year, raising questions about how Tether will adjust its reserves to comply.