Tether’s Bitcoin Holdings Face Pressure as US Laws Tighten

• JPMorgan says Tether might need to sell Bitcoin to follow new US stablecoin rules.  
• The company holds billions in Bitcoin but may shift funds into safer liquid assets.  
• Tether’s CEO claims compliance will be easy as the firm has strong financial reserves. 

Tether, the largest stablecoin issuer, may need to liquidate assets, including Bitcoin, to comply with US crypto restrictions. JPMorgan analysts suggest that proposed laws in Congress could impose stringent reserve requirements, forcing Tether to restructure its holdings. The House’s Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act and the Senate’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act aim to ensure stablecoins maintain 1:1 backing with high-quality, liquid assets. Compliance may require Tether to shift its reserves, impacting the cryptocurrency market. 

Tether’s Reserves and the Regulatory Challenge

According to JPMorgan’s research, only 66% of Tether’s reserves align with the STABLE Act’s requirements, while 83% meet the GENIUS standards. To comply, the company may need to sell BTC, corporate notes, precious metals, and secured loans while increasing its holdings in US Treasury bills and other liquid assets.

Tether holds around 83,758 BTC, worth over $8 billion, according to data from Bitbo. The company declared its plans to allocate 15% of its quarterly profits toward token purchases. However, new regulations could force a shift in strategy, reducing its exposure to crypto-based reserves.

CEO Paolo Ardoino challenged JPMorgan’s findings, stating that analysts overlooked Tether’s $20 billion group equity and its quarterly profits exceeding $1.2 billion from US treasuries. He assured that compliance with regulations would be straightforward, downplaying concerns about the impact of these changes. He said that analysts are “salty” and undervalue his company’s group equity in their analysis of Tether’s reserves and safety issues.

Related: Tether Backs Zengo, Launches USDT0 with Arbitrum for Transfers

Could Regulatory Pressure Reshape Tether’s Strategy?

The US legislative nature for stablecoins is evolving rapidly, raising questions about whether Tether will be forced to revise its asset structure. Tether has already faced compliance challenges in Europe, where it was removed from several exchanges for failing to meet the Markets in Crypto-Assets (MiCA) requirements. The European framework mandates that at least 60% of stablecoin reserves be held in European banks, a condition Tether failed to meet.

Despite holding over $7 billion in reserve buffers and recorded earnings of $13 billion in 2024, changes could compel Tether to sell portions of its Bitcoin holdings. Any major reallocation could influence crypto markets, given Tether’s dominant position.

Tether’s response to these regulations remains critical. Will the stablecoin giant alter its asset composition to comply, or will it challenge expectations?

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