Gushiken Yona
A regulatory showdown looms as Coinbase CEO Brian Armstrong declares the exchange will delist Tether if U.S. laws demand it, placing the world’s most traded stablecoin in the crosshairs.
Tether Regulatory Challenges Intensify
In a recent interview at the World Economic Forum in Davos, Switzerland, Coinbase CEO Brian Armstrong stated that the cryptocurrency exchange would remove Tether (USDT) from its U.S. platform if new legislation mandates such an action. Armstrong also noted that he anticipated future U.S. legislation to demand stablecoin issuers to hold 100% of their reserves in U.S. Treasury bonds and to pass audits.
Armstrong emphasized that while Coinbase values Tether’s role in the crypto ecosystem, offering a bridge for users to transition between cryptocurrencies, it would comply with any future U.S. regulations. “If we are required by law to delist Tether, we will,” the CEO said, adding that Coinbase aims to provide customers with a secure way to move their holdings, but compliance with regulatory changes is a top priority.
Tether Role and Controversial Reserve Practices
Tether, which is pegged 1:1 to the U.S. dollar, has long been a point of contention in the crypto industry due to its alleged limited transparency. Tether’s reserves are primarily held in U.S. Treasury bonds, but the company also backs its stablecoin with gold, bitcoin, and loans.
Despite these assets, Tether has been criticized for not releasing fully audited financial statements, drawing the attention of U.S. authorities investigating potential violations of sanctions and anti-money-laundering laws. Tether, which is based in the British Virgin Islands, published its Independent Auditors’ Reports conducted by BDO Italia on September 30, 2024.
Last year, the Wall Street Journal reported that U.S. Justice and Treasury Departments have been investigating Tether for possible violations of sanctions and anti-money-laundering rules. Tether has said it cooperates with law enforcement to combat illicit activity.
Coinbase’s European Action and Regulatory Compliance
Coinbase’s delisting of Tether for European users in recent weeks, underlined a global trend: tightening regulation of stablecoins. The move directly responded to the European Union’s Markets in Crypto-Assets Regulation (MiCA), which demands that stablecoin issuers hold readily accessible cash reserves in banks.
Across the Atlantic, U.S. senators have also proposed bills to regulate stablecoins, with the aim of prohibiting unregulated, offshore-based versions like Tether, though these efforts remain in their early stages. Conversely, Circle, a U.S.-based competitor and a company in which Coinbase is a shareholder, asserted that its USDC stablecoin already complies with the EU’s MiCA Regulation.
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Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
