JPMorgan Warns: Tether’s Surge Threatens Crypto Markets, Releases Special Report 

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In just 90 days, Tether (USDT), the largest stablecoin, has outpaced traditional financial giants with a staggering annual run rate of $11.4 billion. This massive success has paved the way for almost $100 billion in circulation, surpassing the profits of banking giant Goldman Sachs in the last quarter, as highlighted by Matt Hogan, Bitwise CIO. Tether’s dominance is the cause of concern for JPMorgan regarding regulatory compliance and transparency issues surrounding Tether.

Bank says Tether is Bad for Crypto: Here’s What it Means for you! 

According to JPMorgan analysts led by Nikolaos Panigirtzoglou, the growing dominance of Tether over the past year is bad for the stablecoins and the crypto as a whole. A big regulatory risk for stablecoins is Tether, which is facing many regulatory issues in multiple juridictions and being open about them, making it a bad choice for investors in a long run. 

In defense of Tether! Tether CEO Paolo Ardoino believes Tether’s market dominance may be negative for competitors, including banks aspiring for similar success. However, he emphasizes that it has always been positive for the markets that rely on Tether the most. Since it diverts up to 15% of its operating profit to Bitcoin purchases.

Supporting Tether, Pompliano highlighted Tether’s unique approach, focusing on holding reserves in diverse investments for availability and protection. He quote how the company’s excess equity, standing tall at $5.4 billion, surpasses any remaining secured loans. Notably, Tether boasts a profit per employee that exceeds $100 million, positioning it as one of the most lucrative businesses globally.

Tether vs Stablecoins, Market is at the Extreme Peak

Accorting to the report, other stablecoins could do very well, especially those that are in line with current rules. The bank notes that USD Coin (USDC), which has applied for a public share sale in the U.S., could benefit from Tether’s regulatory issues by actively preparing for upcoming stablecoin regulations and growing across jurisdictions.

Despite the negative reviews, Tether’s market value and market share have grown a lot. It is now used by many centralised crypto exchanges and decentralised finance (DeFi) sites. JPMorgan’s report reveals that the stablecoin made a record-breaking $2.85 billion profit in the last quarter. This shows how resilient it is, even when other cryptocurrencies like USD Coin and Binance’s BUSD are having a rough time.

As Tether nears a $100 billion market cap, its role in the crypto space raises questions about regulatory oversight and potential impacts on other stablecoins.