Key Takeaways
- The popular stablecoin Tether will be delisted from the Coinbase exchange if the law requires it.
- Coinbase CEO Brian Armstrong has confirmed that the delisting will be initiated if the coin fails to meet regulatory standards.
- Tether has already been delisted from its European platform for failing to meet the MiCA standard requirements.
- Tether is planning to introduce a new stablecoin USDTo on the Krakens layer 2 blockchain platform.
- The launch of USDTo is expected to facilitate easy cross-chain swapping through the integration of the Omnichain Fungible Token (OFT).
The U.S. regulatory landscape is transforming the administration of Donald Trump. There have been major changes in all sectors since Trump’s inauguration commenced. The cryptocurrency community has been experiencing a positive shift after his electoral win.
Coinbase CEO Brian Armstrong has indicated that the exchange will delist stablecoin Tether if the U.S. regulatory framework demands it. Stablecoin Tether is pegged at over 138 billion dollars within the exchange. The exchange is indicated to prioritize legal compliance and evolve according to the regulatory standards of the government.
Tether has already been removed from the European platform of the exchange, as the coin was in noncompliance with the framework of MiCA within the EU. Tether is ahead compared to other stablecoins and its competitors like Ripple and Circle. Tether is currently pegged 1:1 to the dollar as it is one of the world’s largest traded cryptocurrencies.
Authorities have felt the need to scrutinize the utility of the coin, considering the circumstances in which a group of evaders, terrorist organizations, and criminal gangs are using the coin for unhindered global transactions. If the stablecoin does not comply with U.S. laws, it will be delisted from the exchange confirmed the CEO.
He confirmed that the coinbase customers will be allowed to shift their holdings into other cryptocurrencies if the delisting happens. The comments were made while Armstrong was emphasizing the importance of initiating a secure trading environment for all the traders.
USDC stablecoin of US-based Circle in which Coinbase is a stakeholder said that it is already compliant with the EU Markets in Crypto Asset Regulations. Two new bills were introduced by US Senators for controlling the stablecoins in the US. The regulations are expected to ban the use of offshore, unregulated versions such as Tether.
Armstrong stated that the US future regulation is expected to demand the stablecoin issuer to hold 100% of their reserves in US Treasury bonds and to periodically pass audits. The reserve funds of Tether are mostly kept in the Treasury and holdings of gold, bitcoin, and loans. The holding company of Tether is registered in the British Vergin Islands.
The company has never released its fully audited financials. The possible legal violations of sanctions and anti-money laundering rules are investigated by the Justice and Treasury Department. The Tether stated that it would cooperate with the law enforcement agencies for compacting against the illicit activities.
Tether is planning to address these emerging complications by implementing new strategies. The introduction of new stablecoin USDTo is planned to be issued on the Karkens layer 2 blockchain platform. The launch is expected to facilitate the easy cross-chain swapping of USDTo by the integration of the Omnichain Fungible Token (OFT) standard for the efficient management of assets.
Tether has changed its headquarters to El Salvador followed by the approval of the Digital Assets Service Provider (DASP) license. This move is in line with El Salvador’s plan to embrace crypto and support Tether to maintain its presence in a more permissive jurisdiction.
The delisting of the Tether stablecoin in light of new regulatory compliance would have a significant impact on the overall stability of the cryptocurrency ecosystem. There are many cryptos paired with Tether for trading.
If the delisting happens then it could impact these trading pairs. The traders will be forced to adopt other cryptocurrencies. This sudden transition strategy will lead to inefficiencies and potential market instability.
Tether also plays a significant role in facilitating cross-border transactions and Decentralized Finance (DeFi) applications. The removal of Tether will create hindrances for both businesses and individuals who are dependent on stablecoins for effective transactions.
The delisting of Tether could lead to the scrutiny of other stablecoins and cryptocurrencies. These additional regulations can lead to additional regulations that could hinder further innovation and growth potential of the sector.
The absence of adequate alternatives to stablecoin like Tether could create trouble in finding viable solutions that could become a hindrance in the upcoming developments of the sector. In the evolution of the crypto landscape, the dynamics between stablecoins will determine their future possibilities.