COINBASE CEO: TETHER MIGHT GET KICKED OFF IF THEY DON’T FOLLOW NEW US RULES

Coinbase's Brian Armstrong just dropped a bomb—if US stablecoin regs demand full Treasury backing, Tether's gonna have to comply or get booted.

Coinbase may be forced to delist Tether’s USDT stablecoin from its platform if upcoming U.S. legislation requires stablecoin issuers to maintain 100% of their reserves in U.S. Treasury bonds and fully cooperate with regular audits. This revelation was made by Coinbase CEO Brian Armstrong during a discussion at the World Economic Forum in Davos.

The move would be a significant blow to Tether, which is currently the third-largest cryptocurrency by market capitalization and plays a crucial role in the cryptocurrency ecosystem. However, Coinbase’s decision would be driven by its commitment to regulatory compliance, a stance that has already led the exchange to delist USDT in Europe due to the EU’s MiCA legislation.

Coinbase CEO: Tether May Be Delisted If It Doesn’t Follow New US Stablecoin Rules

Coinbase CEO Brian Armstrong just dropped a bomb — if US stablecoin regs demand full Treasury backing, Tether will have to comply or get booted.

He said they’d delist USDt if it doesn’t make the cut.

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Coinbase, Stablecoin Regulations, and Tether’s Position

According to Armstrong, the new stablecoin regulations being considered by U.S. lawmakers would require issuers to maintain 100% of their reserves in U.S. Treasury bonds and cooperate fully with regular audits. This move would force Coinbase to remove Tether from its platform as it must comply with the new regulations, similar to the actions taken under the EU’s MiCA legislation.

With a market cap of $138 billion, Tether dominates the stablecoin market, outpacing competitors like Circle’s USDC. The company publishes quarterly attestations to demonstrate the composition of its reserves, which are primarily backed by U.S. Treasury bonds. However, critics maintain that these attestations fall short of complete audits, sparking concerns.

The EU’s MiCA regulations have posed a significant challenge to Tether, prompting Coinbase to ultimately delist USDT in Europe. However, Armstrong’s comments suggest that U.S. lawmakers may adopt similar regulations, which would essentially demand that stablecoin issuers like Tether meet more stringent financial reporting standards. Coinbase would follow these rules and delist USDT if necessary.

Despite these obstacles, Tether’s operations are largely concentrated in emerging markets outside the U.S. and Europe. Additionally, Tether holds reserves in other assets, including Bitcoin and gold, which could further complicate the company’s ability to meet the proposed regulatory requirements if they expand. Armstrong highlighted that Coinbase’s position on regulatory compliance remains unchanged.

Tether’s legal troubles in the U.S. continue as two proposed bills in the country aim to regulate stablecoins, with one bill seeking to exclude offshore and unregulated issuers like Tether. While these bills have stalled, Armstrong anticipates that future legislation will tighten the net, demanding greater compliance. Coinbase is prepared to cooperate by potentially delisting non-compliant stablecoins, as demonstrated in Europe.

After acquiring a Digital Asset Service Provider (DASP) license, Tether relocated its headquarters to El Salvador to capitalize on the nation’s crypto-friendly regulatory environment and avoid the pressures faced in other jurisdictions. However, Tether’s legal woes persist as the company is being investigated by U.S. authorities for potential violations of sanctions and anti-money-laundering regulations.

Kraken's Layer 2 Stablecoin (USDT0) and Cross-Chain Swaps

In other developments within the stablecoin ecosystem, Kraken has introduced USDT0 on its Layer 2 blockchain, Ink. This integration aims to facilitate efficient cross-chain asset swaps by utilizing the Omnichain Fungible Token (OFT) standard for seamless exchanges.

Despite Tether's attempts to adapt and innovate, its challenges in meeting regulatory standards continue.