Coinbase May Consider Delisting Tether During Regulatory Uncertainty

One of the biggest cryptocurrency exchanges in the US, Coinbase, has hinted that it may take Tether’s USDT stablecoin off its platform if new rules in the US require more stringent adherence.

Brian Armstrong, CEO of Coinbase, recently talked about the possible effects of new stablecoin laws in the US under President Donald Trump. Armstrong stated in a Wall Street Journal article that future legislation might mandate that stablecoin issuers retain 100% of their reserves in Treasury bonds and carry out regular audits to guarantee transparency.

Armstrong hinted that Coinbase could delist Tether’s $138 billion stablecoin if these regulatory measures become mandatory. Notably, Coinbase had already removed USDT from its European platform due to noncompliance with the EU’s MiCA framework.

Tether remains the leading stablecoin in the market, outpacing competitors like Circle’s USDC and Ripple’s newly introduced Ripple USD (RLUSD). Despite its dominance, Tether has faced scrutiny over its reserve practices and financial disclosures.

Tether’s Reserves and Criticism

Tether reports holding 80% of its reserves in Treasury bills, verified through financial attestations by BDO Italia, an independent accounting firm. These quarterly updates were introduced after the 2022 market collapse, which exposed insolvencies at major firms like FTX and Three Arrows Capital.

Critics contend that these attestations fall short of complete audits, raising concerns about Tether’s financial stability even though they offer some reassurance. It’s still unclear if Tether will abide by any future US laws that call for stricter reporting guidelines.

Emerging markets outside of the US and Europe are the main focus of Tether’s business. Additionally, El Salvador, the first country to accept Bitcoin as legal cash, will host the company’s worldwide headquarters. This calculated action highlights Tether’s emphasis on markets with supportive bitcoin regulations.

The position taken by Coinbase demonstrates the mounting pressure on stablecoin issuers to conform to changing regulatory regimes. The stablecoin ecosystem might undergo major changes as governments impose more stringent regulations.