“JPMorgan Chase: Stablecoin Regulation to Be Announced, U.S. Empowered to Sanction Offshore Entities, Tether Faces Grave Challenges”
Morgan Stanley research team reiterated in its report that due to the upcoming stablecoin regulations, Tether needs to be more transparent and compliant with standards such as KYC/AML, which will significantly weaken its attractiveness.
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Stablecoin regulations are imminent, and Tether faces challenges
The US still has ways to sanction offshore entities
US regulatory pressure will greatly weaken USDT’s adoption attractiveness
Stablecoin regulations are imminent, and Tether faces challenges
According to CoinDesk, a research report released by JPMorgan on Thursday pointed out that Tether’s long-standing dominance is under threat due to the imminent stablecoin regulations in the United States.
Prior reports mentioned that in a closed-door meeting of the House Financial Services Committee, Federal Reserve Chairman Jerome Powell expressed optimism about reaching a consensus on stablecoin regulation. He reportedly stated, “We are close to reaching an agreement on stablecoin legislation.” (“Pass the Stablecoin Bill Soon!” Federal Reserve Chairman Powell Urges Congress to Speed Up)
The US still has ways to sanction offshore entities
Although Tether is not registered in the United States, a research team led by Nikolaos Panigirtzoglou at JPMorgan pointed out that regulatory agencies can still exert a certain degree of control over its offshore entities through the US Office of Foreign Assets Control (OFAC).
The report used the example of Tornado Cash’s association, stating that the US Treasury Department can still add the cryptocurrency mixer Tornado Cash to the sanction blacklist in August 2022 and accuse it of aiding money laundering.
The report stated that while legal actions directly targeting offshore entities and decentralized companies are complex, indirect measures and international cooperation may hinder people from using Tether. (Tornado Cash Developer to be Detained for Another Three Months, Public Hearing to be Held During This Period)
US regulatory pressure will greatly weaken USDT’s adoption attractiveness
The report reiterated that due to the arrival of stablecoin regulations, Tether needs to be more transparent and compliant with standards such as KYC/AML, which will significantly weaken its attractiveness.
In particular, stablecoin regulations will be globally coordinated through the Financial Stability Board (FSB) for the G20, further limiting the adoption of Tether.
Despite Tether’s recent efforts to release financial information, the report still believes that this information is not enough to alleviate market concerns. (Tether’s Q4 Excess Reserves Reach $5.4 Billion, Expected to Earn $6.2 Billion in 2023)
This is not the first time that Morgan Stanley’s research team has criticized Tether. (Morgan Stanley: Concerns About Tether’s Dominance in Stablecoins)
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Further reading
Members of the Tian Dao Meng Mei Ying Club set up physical stores for fraud: “Investing in Tether will make money,” 40 people cheated out of 60 million yuan
Tether CEO: Why can TRON and USDT maintain their leading position in blockchain payments?
