13-2-2025 – Leading stablecoin issuer Tether may need to undertake a significant overhaul of its reserve holdings to comply with proposed American regulations, according to a new analysis from JPMorgan’s research team.
The world’s largest stablecoin provider, which manages nearly 60% of the global market, could be forced to divest various assets including bitcoin, precious metals, corporate paper, and secured loans to meet stringent new regulatory requirements being considered by US lawmakers.
Two pivotal pieces of legislation – the STABLE Act in the House of Representatives and the GENIUS Act in the Senate – aim to establish comprehensive oversight of stablecoin issuers through licensing requirements, risk management protocols, and mandatory 1:1 reserve backing.
JPMorgan analysts, led by Nikolaos Panigirtzoglou, revealed in their Wednesday report that only 66% of Tether’s current reserves would meet compliance standards under the House bill, while 83% would satisfy the Senate’s proposed requirements. The analysis noted a troubling decline in these compliance ratios since mid-2024, coinciding with substantial growth in stablecoin supply.
Tether’s substantial bitcoin holdings, currently valued at over £8 billion, represent a significant portion of assets that might require restructuring. The company first declared its intention to invest up to 15% of quarterly profits in bitcoin in 2023, a strategy that may need revision under the new regulatory framework.
Despite reporting robust financial health in its Q4 2024 attestation, including a record reserve buffer exceeding £7 billion and annual profits of £13 billion, Tether faces mounting regulatory challenges. The proposed legislation would necessitate a shift towards more conventional assets such as US Treasuries and other highly liquid instruments.
The company has already encountered regulatory hurdles in Europe, where MiCA regulations mandate that large issuers maintain 60% of reserves in EU banks. While Tether’s limited European presence helped minimise the impact of subsequent exchange delistings, analysts suggest the US market poses a more significant challenge due to the company’s substantial American footprint.
“The proposed regulations represent a watershed moment for stablecoin operations in the US,” noted a senior market analyst at a leading financial institution.
