JPMorgan Pressures Tether to Liquidate Bitcoin Amid Looming U.S. Stablecoin Regulations

Tether has firmly dismissed claims by JPMorgan analysts suggesting that it may need to sell off its Bitcoin holdings to comply with proposed U.S. stablecoin regulations. 

The stablecoin giant responded on February 13, 2025, reaffirming its financial resilience and commitment to regulatory engagement, while taking a pointed swipe at JPMorgan for its alleged misunderstanding of the crypto market.

A Looming Challenge for Tether?

The U.S. Congress is currently reviewing two key legislative proposals aimed at tightening stablecoin oversight:

• The Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, introduced in the House, which would require stablecoin issuers to hold only highly liquid assets as reserves.

• The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, proposed in the Senate, which mandates federal oversight for large issuers while allowing a slightly broader range of eligible reserves.

Both bills seek to strengthen licensing requirements, risk management rules, and reserve transparency, potentially forcing issuers like Tether to modify their asset allocations.

JPMorgan analysts, led by Nikolaos Panigirtzoglou, argued that if either bill is enacted, Tether may have to offload certain reserve assets, including Bitcoin, precious metals, corporate paper, and secured loans, to comply with stricter liquidity and backing requirements. 

Also read: USDT Dominance: Definition and Key Factors Driving Tether’s Market Share

Their report noted that:

• Only 66% of Tether’s reserves currently meet the STABLE Act’s standards.

• 83% of its reserves align with the GENIUS Act’s requirements.

• The compliance ratio has declined since mid-2024, coinciding with a surge in USDT supply.

Given these figures, the analysts speculated that Tether would need to shift more of its reserves into U.S. Treasuries and other high-quality liquid assets to maintain full compliance.

Tether Fires Back: Financial Strength and Regulatory Readiness

Tether swiftly rejected JPMorgan’s assessment, asserting that it is well-prepared to adapt to any regulatory changes without the need for drastic asset liquidations. 

The company emphasized its strong balance sheet, highlighting its ability to generate over $1.2 billion in quarterly profits from U.S. Treasury holdings alone.

In its statement to CryptoSlate, Tether stated:

“Even in the most extreme scenario, JPMorgan discounts the fact that Tether’s Group equity exceeds $20 billion in very liquid assets. Adapting to new requirements will be straightforward.”

Tether’s CEO Paolo Ardoino took an even sharper tone, implying that JPMorgan analysts were frustrated by their inability to purchase Bitcoin at lower prices:

“JPM analysts are salty because they don’t own Bitcoin.”

Tether’s Bitcoin Reserves: A Strategic Asset or Regulatory Liability?

Tether’s Bitcoin holdings have grown substantially since the company announced in 2023 that it would allocate up to 15% of its quarterly profits toward purchasing BTC. 

As of its latest Q4 2024 attestation report, Tether holds approximately 83,758 BTC, valued at over $8 billion.

While these reserves bolster Tether’s financial position, they could also pose a regulatory risk under the proposed U.S. legislation, which favors highly liquid, stable, and government-backed assets. 

If required to restructure its holdings, Tether may be forced to convert a significant portion of its Bitcoin reserves into U.S. Treasuries or similar instruments.

Global Regulatory Pressure: A Persistent Challenge for Tether

Beyond the U.S., Tether has already encountered regulatory hurdles in Europe, where the Markets in Crypto-Assets (MiCA) framework mandates that 60% of reserves be held in European banks. 

Compliance with these rules led to USDT’s delisting from several European exchanges, though Tether’s limited market share in the region minimized the overall impact.

However, the U.S. market presents a far greater challenge, given Tether’s dominant position in the American stablecoin ecosystem. USDT currently represents nearly 60% of the global stablecoin market, with a market capitalization exceeding $140 billion.

JPMorgan analysts warned that stricter U.S. regulations—particularly mandating more transparency and frequent reserve audits—could put Tether under immense pressure.

“U.S. stablecoin regulations requiring more transparency and frequent reserve audits pose additional challenges to Tether,” the report stated.

What’s Next? The Uncertain Future of U.S. Stablecoin Regulations

With both bills still under review, it remains uncertain if or when these proposals will become law. Even if passed, Tether’s response and compliance strategy will play a crucial role in shaping its future market dominance.

The stablecoin giant’s financial strength, regulatory adaptability, and ability to navigate geopolitical scrutiny will be key factors in determining whether USDT retains its leading position or cedes ground to competitors.

For now, Tether remains defiant, asserting that it can withstand any regulatory storm while maintaining its Bitcoin-heavy reserve strategy—a stance that will likely continue to divide opinions among investors, regulators, and industry analysts alike.

FAQ

1. Is Tether required to sell its Bitcoin holdings due to U.S. regulations?

No, Tether has firmly denied JPMorgan’s claims that it may need to liquidate its Bitcoin reserves. The company asserts that it is financially stable and prepared to comply with any regulatory changes without offloading assets.

2. What U.S. stablecoin regulations are being proposed?

Two major bills—The STABLE Act and the GENIUS Act—are under review. Both seek to impose stricter licensing, reserve transparency, and liquidity requirements on stablecoin issuers, potentially affecting Tether’s asset allocation strategy.

3. How much Bitcoin does Tether currently hold?

As of its latest Q4 2024 report, Tether holds approximately 83,758 BTC, valued at over $8 billion. This allocation stems from its strategy of reinvesting up to 15% of its quarterly profits into Bitcoin.

4. Could new regulations force Tether to change its reserve structure?

If U.S. lawmakers mandate that stablecoin issuers hold only highly liquid, government-backed assets, Tether may need to adjust its portfolio by increasing its holdings of U.S. Treasuries while reducing exposure to Bitcoin and other riskier assets.

5. Will these regulations impact Tether’s market dominance?

While regulatory pressures could challenge Tether’s current reserve strategy, the company maintains that it is financially resilient. However, increased transparency requirements and compliance costs may influence its long-term market position.