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JPMorgan has warned of increased risk for the crypto market resulting from Tetherβs βlack of regulatory compliance and transparency.β The global investment bankβs analysts explained that other stablecoin issuers that have been more compliant with existing regulations are likely to benefit from the coming regulatory crackdown on stablecoins and gain market share.
JPMorgan Warns About Tether and Crypto Market Risks
Global investment bank JPMorgan released a report on Thursday cautioning that the rapid expansion of Tetherβs USDT stablecoin is a risk for the crypto market overall. USDT is the worldβs largest stablecoin, with a market capitalization exceeding $96 billion at the time of writing.
JPMorganβs analysts explained that Tetherβs βlack of regulatory compliance and transparencyβ is an increasing risk for the overall crypto market. Noting that Tether falls short of competitor Circle, the issuer of USDC, when it comes to regulatory compliance for their stablecoins, the analysts wrote:
Stablecoins issuers that have been more aligned with existing regulations are likely to benefit from the coming regulatory crackdown on stablecoins and gain market share.
Responding to JPMorganβs criticism of USDT and the risks to the crypto market, Tether CEO Paolo Ardoino stated:
Tetherβs market domination may be a βnegativeβ for competitors including those in the banking industry wishing for similar success but itβs never been a negative for the markets that need us the most.
βWeβve always worked closely with global regulators to educate them on the technology and provide guidance on how they must think about it,β the executive added.
Tether faced a $41 million fine from the U.S. Commodity Futures Trading Commission (CFTC) in 2021 for misrepresenting its reserves, specifically claiming that USDT was fully backed by U.S. dollars. Following the fine, the crypto firm has strived to improve transparency by issuing quarterly attestations of its operations and finances. Tether reported a profit of $6.2 billion for 2023.
What do you think about JPMorgan analystsβ warning regarding Tether, USDT, and the risks to the overall crypto market? Let us know in the comments section below.
