JP Morgan: Tether’s market dominance could endanger cryptocurrencies

Bloomberg reports, stablecoin operator Tether Holdings Ltd. is expanding its dominant market share after achieving record profits. JPMorgan Chase Co. says this is a risk for the overall cryptocurrency market. A report released by JPMorgan on Thursday shows that the centralization of USDT has increased over the past two years, consolidating its position as the leading stablecoin, but Tether's "lack of regulatory compliance and transparency" is bringing increasing risks to the market. JPMorgan analysts wrote, "Stablecoin issuers that are more compliant with existing regulations may benefit from the upcoming stablecoin regulatory crackdown and gain market share." Since paying a $41 million fine to the CFTC in 2021 for falsely reporting reserves, Tether has been committed to making its operations and finances more transparent through quarterly attestations. Nevertheless, the report states that Tether's stablecoin still lags behind competitor Circle in terms of regulatory compliance with USDC tokens. Stablecoins may soon face stricter regulation in the United States and Europe. While the Payment Stablecoin Act is awaiting a vote in the US House of Representatives, the European Union's Markets in Crypto Assets (MiCA) is expected to be partially implemented in June of this year. Paolo Ardoino, CEO of Tether, said in a statement, "Tether's dominant market position may be 'negative' for competitors, including the banking industry, who hope to achieve similar success, but it has never been negative for the market that needs us the most. We have always worked closely with global regulatory agencies, providing them with education on technology and guidance on how they should approach this issue."