Crypto News – According to a research paper released by JPMorgan on Thursday, Tether’s dominant position as the largest stablecoin is insecure because it relies on the American market and impending regulations.
Control Over Tether: US Regulators Have Some Control Over the Stablecoin
According to the report, even though Tether is not headquartered in the United States, the Office of Foreign Assets Control (OFAC) allows regulators to have some influence over the stablecoin issuer’s offshore activities. The bank cited the stablecoin’s connection to Tornado Cash as one such instance, pointing out that in August 2022, OFAC placed the Ethereum network’s crypto-mixer on a blacklist, alleging it assisted in money laundering.
While direct legal actions against offshore entities and decentralized firms are complex, indirect measures and international cooperation could potentially hinder the usage of tether,
analysts led by Nikolaos Panigirtzoglou
Indirect Pressure on Tether
Indirect pressure on Tether as its attractiveness would diminish relative to stablecoins with more transparency and greater compliance with new regulatory KYC/AML standards is likely to result from upcoming stablecoin regulation, the authors wrote. They also noted that this issue would also apply to decentralized finance (DeFi), where USDT is used as a source of liquidity and collateral.
Stablecoin regulations, in particular, are set to be coordinated globally via the Financial Stability Board (FSB) across the G20, further constraining the usage of unregulated stablecoins such as tether,
the report
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