JPMorgan’s report said there are risks associated with Tether’s market dominance, as what it called a lack of regulatory compliance and transparency on the part of the firm could potentially pose a threat to the crypto market
Tether is making headlines in the crypto currency market as its USDT token nears $100 billion in market capitalisation, the largest on the market.
While this milestone marks Tether’s growing popularity and success, a recent report by JPMorgan Chase has raised concerns about the firm’s compliance and transparency, Bloomberg reported Thursday.
Stablecoins, such as Tether’s USDT, play a key role in the crypto market, per the report. Pegged to a fiat currency, they serve as a medium of exchange and store of value for traders that is less volatile compare to other digital assets.
Nevertheless, JPMorgan’s report said there are risks associated with Tether’s market dominance, as what it called a lack of regulatory compliance and transparency on the part of the firm could potentially pose a threat to the crypto market in general, according to the report.
In response, a Tether spokesperson said that the stablecoins are needed by those who use them and that Tether works closely with regulators across the world to educate them about the technology, according to Bloomberg.
The scrutiny of stablecoins by regulatory bodies is expected to intensify in the US and Europe, the report added. The Clarity for Payment Stablecoin Act, currently awaiting a vote in the U.S. House of Representatives, aims to address regulatory concerns. Similarly, the EU’s Markets in Crypto-Assets Regulation (MiCA) is set to be partially implemented in June of this year.
JPMorgan analysts said that stablecoin issuers who have adhered closely to current regulations will benefit from the upcoming regulatory clampdown and gain market share, according to the Bloomberg report.
Tether has taken steps to improve transparency, per the report. The firm now provides quarterly attestations, following a $41 million fine paid to the CFTC in 2021 for misleading customers about its reserves.