The United States Stable Coin Bill is in the works, JPMorgan Chase questions the insufficient reserves of Tether, can the USDT market be abandoned?

The United States has proposed two Stable Coin bills, which will subsequently affect the Stable Coin market with a Market Cap of 23 million. JPMorgan Chase's report pointed out that under the latest bill, the largest stablecoin issuer Tether only has 66% to 83% Compliance reserves, although Tether's CEO, Paolo Ardoino, came out to sarcastically criticize JPMorgan Chase for issuing this report because they missed the BTC train. However, Tether has been delisting EURt in Europe due to the impact of MiCA, and then Circle has risen to catch up. Will Tether give up the huge U.S. market?

JPMorgan questions Tether's insufficient reserves

The United States has proposed two Stable Coin bills, namely the House's "STABLE Act" and the Senate's "GENIUS Act", aiming to regulate Stable Coin issuers through licensing requirements, risk management rules, and 1:1 reserve support.

According to The Block's report, JPMorgan analyst Nikolaos Panigirtzoglou wrote in Wednesday's report that, according to the House's 'STABLE Act', only 66% of Tether's reserves are Compliance, while according to the Senate's 'GENIUS Act', Tether's reserves also only meet 83% of the standard. The analyst noted that both of these numbers indicate that with the surge in Stable Coin supply, Tether's Compliance rate has been declining since mid-2024.

GENIUS regulations are strict, and stablecoin issuers may face significant adjustments

The 'STABLE Act' enforces stricter reserve requirements and allows state-level supervision, while the 'GENIUS Act' requires federal oversight of large issuers and allows for a wider range of reserve assets. Analysts say that if either bill passes, Tether will need to restructure its reserves, moving holdings into U.S. Treasury bonds and other liquid assets.

Looking at the latest quarterly data for Tether in 2024, as of December 31, 2024, the total assets of the group were $143,704,755,547, and the total liabilities were $136,617,485,006.

Part of the asset reserves, 82.35% are held in the form of cash, cash equivalents, and other short-term deposits. Tether holds as much as $113 billion in direct and indirect US government bonds. Tether also holds $7.86 billion worth of BTC and $5.32 billion worth of precious metals, including gold (.

Based on JPMorgan's report, 82.35% of Tether's reserve assets consist of cash, cash equivalents, and other short-term deposits, which may all fall under the Compliance reserves of the GENIUS Act. However, the STABLE Act may exclude options other than U.S. Treasury bonds, potentially excluding commodity coin-type funds and buyback transactions. The criteria can be considered quite stringent. If viewed under these conditions, even Circle, which has always emphasized Compliance and sought listing in the United States, will need to make adjustments!

Tether chooses to participate indirectly in the European market, but faces greater challenges in the US market

Tether controls nearly 60% of the stablecoin market and is currently facing regulatory scrutiny in Europe. The European MiCA regulations require major issuers to hold 60% of EU bank reserves. Analysts say this has led to Tether being delisted from several exchanges in Europe, but its limited market share in the region has mitigated the impact.

)USDTMarket Cap shrank due to MiCA taking effect, Tether chooses to invest instead of sacrificing returns, indirectly participating in the EU market(

In contrast, analysts say that as the company has a larger market share in the United States, the regulatory challenges for Tether in the US market are greater. Analysts say that as both proposed bills require high-quality, highly liquid assets as reserves, Tether's dominant position in the United States may face pressure.

CEO Ardoino refuted, sarcastically saying that JPMorgan missed the BTC train

In response, Tether's CEO Paolo Ardoino also came forward to refute, not forgetting to taunt that JPMorgan Chase issued this report because they missed the BTC train.

"Even though there is still much to be determined in the negotiations on the bill in the coming weeks, even in the most extreme scenario, JPMorgan ignored the fact that Tether's group equity )Stable Coin reserves( exceed $20 billion in other highly liquid assets, generating over $1.2 billion in profit per quarter through U.S. Treasuries alone, not to mention profits from other investments and activities. Tether may have the best risk management in the industry. JPMorgan is frustrated because they missed the BTC train."

While a lot still needs to be defined during consultations on the bills in coming weeks, even in the most extreme scenario, JPMorgan discounts the fact that Tether’s group equity )on top of stablecoin reserves( is over $20 billion in other very liquid assets and is generating…

— Paolo Ardoino )@paoloardoino( February 13, 2025

Circle is catching up, does Tether have a chance in Compliance in the United States?

Based on the latest audit report of Tether, even under the relatively loose 'GENIUS Act', Tether still has the following assets to deal with, including corporate bonds of 14.27 million, gold of 5.3 billion, BTC of 7.86 billion, other investments of 3.98 billion, collateral securities of 8.19 billion. Even after deducting the excess reserves of 7.09 billion US dollars, there are approximately 18.2 billion US dollars that are non-compliant.

As for whether these assets really have excellent liquidity as CEO Paolo Ardoino said? It should be only gold and BTC, right? Based on this, JPMorgan believes that Tether may need to sell gold or BTC and transfer it to US Treasury bonds, which seems reasonable.

JPMorgan analysts also said that the proposed bill is expected to be enacted later this year and could pose a "more significant" challenge to Tether. After all, while Tether can abandon the smaller euro Stable Coin EURT in Europe, the US dollar Stable Coin USDT is its important source of income, and Tether will never give it up. The total Market Cap of USDT has reached 141.9 billion US dollars, accounting for 61% of the total Stable Coin market of 230.5 billion US dollars. Following closely is Circle's USDC, with a Market Cap of 56.1 billion US dollars. Circle's Market Cap has been rising steadily from 28.1 billion US dollars in March last year, driven by its Compliance in the European MiCA, and its market share is also rising. It seems that while there is hope for accelerating Stable Coin-related bills in the United States, Tether will have a tough battle to fight.

This article has a spectrum of the US Stable Coin Bill, with JPMorgan questioning the insufficient reserves of Tether. Can the USDT market be abandoned? First appeared on Chain News ABMedia.