Tether May Need To Sell Bitcoin To Comply With US Laws, JPMorgan Warns

Tether USDT/USD may have to restructure asset reserves, potentially forcing the company to sell some of its holdings, including Bitcoin BTC/USD, according to JPMorgan analysts.

What Happened: This move, should it occur, could ripple through the cryptocurrency market, altering established dynamics, The Block reported.

The impetus for this potential shift stems from proposed legislation currently under consideration in Congress.

The U.S. House and Senate are each deliberating separate bills — the STABLE Act and the GENIUS Act, respectively — designed to impose stricter regulatory controls over stablecoins.

Both bills aim to mandate licensing, enhanced risk management protocols, and requirements for stablecoin issuers to maintain reserves that fully back their circulating tokens on a 1:1 basis.

However, the composition of those reserves is where the crunch comes for Tether.

A breakdown of Tether’s current asset allocation, conducted by JPMorgan’s team under Nikolaos Panigirtzoglou, suggests that a sizable portion would not meet the stricter definitions of acceptable reserve assets as envisioned in these proposed laws.

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Specifically, the analysis estimates that only 66% of Tether's backing assets are compliant based on the STABLE Act and that 83% meet those in the GENIUS Act.

The company had previously committed to allocating 15% of its quarterly profits toward Bitcoin purchases.

However, if either of the proposed U.S. bills becomes law, Tether may need to shift its holdings into U.S. Treasuries and other highly liquid assets to ensure compliance.

Tether's Q4 2024 attestation report, published in January, disclosed that its reserve buffer had grown to $7 billion for the first time, with annual profits of $13 billion.

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