Crypto Markets Could Be Under Threat as Tether Booms to $100B, Warns JPMorgan

Published by

Qadir AK

February 5, 2024

In just 90 days, Tether (USDT), the top stablecoin, has outpaced financial giants, boasting an impressive annual run rate of $11.4 billion. This success has led to nearly $100 billion in circulation, surpassing Goldman Sachs’ profits in the last quarter, as reported by Matt Hogan, Bitwise CIO.

However, JPMorgan expresses concern over Tether’s dominance, citing regulatory and transparency issues.

$100 Billion and Growing!

JPMorgan analysts, led by Nikolaos Panigirtzoglou, see Tether’s growing dominance over the past year as a potential risk for stablecoins and the broader crypto market. The transparency around Tether’s regulatory challenges is seen as a drawback for long-term investors.

Tether’s CEO, Paolo Ardoino, defends the stablecoin, suggesting that its dominance may unsettle competitors, including banks. He highlights the positive impact on markets reliant on Tether, emphasizing the allocation of 15% of operating profits to Bitcoin purchases.

Unique Approach and Strong Finances

Supporting Tether, Pompliano notes its unique approach, holding reserves in diverse investments for availability and protection. Tether’s financial strength, with $5.4 billion in excess equity and a profit per employee exceeding $100 million, positions it as a lucrative global business.

Tether vs Stablecoins

Contrary to concerns, the report suggests other stablecoins could thrive, particularly those following existing rules. USD Coin (USDC), seeking a public share sale in the U.S., could benefit from Tether’s regulatory challenges by actively preparing for stablecoin regulations.

Despite skepticism, Tether’s market value and share have grown significantly. Widely used by crypto exchanges and DeFi platforms, Tether made a record-breaking $2.85 billion profit in the last quarter, showcasing its resilience compared to USD Coin and Binance’s BUSD.

Nearing a milestone

As Tether approaches a $100 billion market cap, questions arise about regulatory oversight and potential effects on other stablecoins.

Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.