According to CEO Brian Armstrong, Coinbase will delist Tether’s USDT stablecoin if the new law goes into effect. There are currently several attempts to rework U.S. cryptocurrency legislation that could impact the company, but no progress has been made yet.
So far, Tether has experienced some setbacks due to the EU’s MiCA legislation, but if a similar effort moves forward in the U.S., its operations could be severely disrupted.
US legislative changes could challenge Tether
Coinbase CEO Brian Armstrong has been vocal about the previous administration’s crackdown on cryptocurrencies. The exchange faced serious challenges from the SEC under Gensler’s leadership.
A U.S. court sided with his company in its SEC legal action, but the CFTC issued a subpoena against it. Armstrong also accused the FDIC of withholding key documents.
However, the exchange welcomed positive regulatory changes from the new government. Armstrong claims Coinbase will be forced to delist Tether’s USDT.
“There are a lot of people using (USDT), and if we want to help them transition to a system they think is safer, we want to give them an off-ramp,” Armstrong said.
Armstrong added that U.S. lawmakers could force Tether and other stablecoin issuers to hold reserves in U.S. Treasury bonds and pass regular audits. Tether holds most of its reserves in government bonds, but also maintains reserves in commodities such as Bitcoin and gold.
This particular issue has also created notable problems for USDT in the EU under the new MiCA regulations.
In other words, Armstrong predicts that similar problems may occur with Tether in the future. In this case, he will cooperate with delisting requirements, as will EU exchanges.
Additionally, Coinbase is a majority shareholder in Circle, a small stablecoin that directly challenged Tether’s European market dominance.
“The stablecoin market is valued at $218.7 billion, and this move could be a game-changer, especially as the United States struggles to keep the dollar at its peak. “This could be the start of a major overhaul for Tether and its competitors.” Posted by Mario Nawfal on X (formerly Twitter).
In other words, although the United States is moving toward a new cryptocurrency regulatory paradigm, enforcement action is still possible, especially against non-US cryptocurrency companies.
Armstrong noted that the Senate has introduced two bills that would impose such restrictions on Tether, but neither has yet made progress. Tether recently moved to El Salvador, but still needs the U.S. market.
Ultimately, the likelihood of these regulations being passed is anyone’s guess. The U.S. cryptocurrency industry is calling for a comprehensive new regulatory framework that will almost certainly impact Tether.
Armstrong wanted to signal that Coinbase is ready to collaborate on this framework, even if Tether is left out.
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