Major American investment bank JPMorgan has expressed concern about crypto stablecoins. In particular, the bank is concerned about the growing dominance of Tether, the company behind the USDT stablecoin. Where exactly do these concerns come from?
Increasing risks with crypto stablecoins
JPMorgan analysts led by Nikolaos Panigirtzoglou yesterday expressed concern about Tether, an important link within the crypto industry.
“Tether is particularly at risk due to a lack of regulatory compliance and transparency,” said the report, seen by The Block. “As a result, we view Tether’s increasing concentration over the past year as negative for the stablecoin universe and the crypto ecosystem in general,” the analysts said.
Stablecoins are an integral part of the broader crypto world due to their low price volatility. USDT is by far the most popular US dollar-pegged stablecoin in the industry.
JPMorgan analysts write that stablecoin issuers around the world face regulatory risks.
Approval is awaited in the USA Clarity for Payment Stablecoins Act from Congress. In the European Union, the MiCa legislation will, among other things, provide a legal framework for stablecoin issuers.
Analysts at JPMorgan believe stablecoin issuers that strictly adhere to existing rules could benefit from upcoming regulations and potentially gain more market share.
Tether’s largest competitor, Circle, was also covered in the report. Circle, the issuer of USDC, filed for an IPO last month. According to analysts, this decision suggests that the company has plans for international expansion and is proactively preparing for the upcoming regulations surrounding stablecoins.
Criticism of Tether
Tether has been criticized from many different quarters of the crypto world, often due to its lack of transparency.
Last month, the United Nations also criticized Tether because USDT was widely used by criminals. In a critical response at the time, Tether said it was working closely with law enforcement to prevent USDT-related crimes.
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