Tether could face challenges if proposed U.S. stablecoin regulations are enacted, which may require the company to sell some of its reserves to meet new compliance standards, according to a report by JPMorgan. The report indicates Tether’s reserves are only 66% compliant under the STABLE Act and 83% under the GENIUS Act. These proposed regulations mandate that stablecoins with a market cap over $10 billion adhere to stricter reserve requirements, restricting them to high-quality, liquid assets. Tether, which holds a 60% market share in the stablecoin space, may need to sell non-compliant assets, such as precious metals and cryptocurrencies, and purchase compliant assets like U.S. T-bills. JPMorgan noted a decline in Tether’s compliance ratio as stablecoin supply surged, indicating a need for asset adjustments ahead of the regulations. Despite potential challenges, Tether representatives expressed confidence in adapting to new requirements, while also highlighting the company’s significant liquidity and continuous profit generation through U.S. Treasuries.

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