Tether Continues To Dominate Stablecoin Market, JPMorgan Worries USDT Risk

USDT stablecoin. (Photo; Doc. Coincheckup)

JAKARTA - Tether, the publisher of the USDT stablecoin which is one of the largest cryptocurrencies in the world, continues to record profits and expand its market footprint. This week, Tether scored an additional $1 billion (Rp15.7 trillion) while adding $13 billion (Rp203.5 trillion) to its market cap in the last four months.

On the other hand, the giant investment bank JPMorgan expressed concern that Tether's rapid expansion and dominance could pose a huge risk to the crypto market as a whole. JPMorgan also highlighted the lack of regulatory transparency with Tether.

Tether executive Paolo Ardoino immediately responded, saying that the dominance of this market is 'negative' for JPMorgan to compete with them in stablecoin spaces.

Tether's market dominance may be 'negative' to competitors, including those in the banking industry who want similar success, but it's never been a negative thing for markets that need us the most. We're always working with global regulators to give them an understanding of this technology and provide guidance on how they should think about it," Ardoino said.

Interestingly, the latest report also shows that Tether's net profit has now jumped to 10% from JPMorgan's revenue. In the past year, Tether's market cap has jumped by 35%, with the company adding $4 billion (Rp62.6 trillion) just in January.

One of the main reasons behind this is Tether's direct competitor Circle (USDC), losing its market share due to regulatory action. Stablecoin Tether (USDT) nearly reached $100 billion (IDR 1,565.5 trillion) in circulation, marking an important milestone for the company.

On Thursday, February 1, JPMorgan pointed out that Tether's "lack of regulatory compliance and transparency" poses an increased risk to the crypto market as a whole. Regulational checks for stablecoins are in sight both in the US and Europe.

The "Clarity for Payment Stablecoin Act" is currently awaiting a vote at the US House of Representatives, while the implementation of part of the European Union's Crypto Asset Market Regulation (MiCA) is anticipated in June this year.

"Pengerbit stablecoin yang lebih sejalan dengan regulasi yang ada kemungkinan akan mendapatkan manfaat dari penindakan regulasi yang akan datang terhadap stablecoin dan mendapatkan lapangan pasar," tulis JPMorgan, dikutip Coinape.

Tether has taken steps to increase transparency in operations and finance after paying CFTC a $41 million (Rp641.9 billion) fine in 2021, related to misinformation about Tether reserves.

Despite this, the JPMorgan report shows that this leading stablecoin is still losing in terms of regulatory compliance with its USDT tokens compared to its competitor, Circle, the USDC stablecoin issuer.USDT is currently nearly quadrupled in the amount of USDC stablecoins. Both USDT and USDC occupy the top ten of the crypto list.