David Edwards
JPMorgan highlighted in a recent research report that the growing dominance of the stablecoin tether (USDT) poses a threat to the broader crypto ecosystem. The bank expressed concerns over the past year’s increasing reliance on tether, seeing it as a detriment to both the stablecoin sector and the wider cryptocurrency world.
The report pointed out the regulatory challenges stablecoins face in various regions, with tether being particularly vulnerable due to its limited regulatory compliance and transparency. This situation, according to JPMorgan analysts led by Nikolaos Panigirtzoglou, places tether at a higher risk compared to its counterparts.
However, there appears to be a silver lining for other stablecoins. JPMorgan suggests that stablecoins which have aligned more closely with existing regulations could stand to gain from any intensified regulatory scrutiny, potentially capturing a larger market share.
One potential beneficiary identified by the bank is USD Coin (USDC), especially as it moves towards public share offerings in the U.S. and seems to be strategically positioning itself for the anticipated stablecoin regulations by expanding its presence across different jurisdictions.
JPMorgan also observed that tether has experienced substantial growth in terms of market cap and market share, gaining widespread acceptance on both centralized crypto exchanges and within the decentralized finance (DeFi) ecosystem. Recently, the issuer of tether reported a record $2.85 billion profit for the last quarter, with its flagship stablecoin nearing a market capitalization of $100 billion.
Furthermore, the report noted that tether has managed to capitalize on the instability experienced by other stablecoins, such as USDC and Binance’s BUSD, enhancing its position in the market.
