US Authorities Can Exert Control Over Tether, Says JPMorgan
While Tether may not be a U.S. entity, American authorities can still exert control over the stablecoin issuer through the Office of Foreign Assets Control (OFAC), according to JPMorgan. The bank’s analysts stated that regulators can control Tether’s offshore usage via OFAC, citing the stablecoin’s association with Tornado Cash, a privacy enhancement platform. OFAC had previously sanctioned Tornado Cash in 2022 for alleged money laundering activities. Tether froze its stablecoins held in crypto wallets sanctioned by OFAC last December as a security measure. Tether CEO Paolo Ardoino dismissed JPMorgan’s concerns, suggesting they are jealous of Tether’s success.
JPMorgan Predicts Decreased Use of Tether with Stablecoin Regulations
JPMorgan analysts predict that upcoming stablecoin regulations in the U.S. and Europe will impact the usage of Tether. These regulations would diminish Tether’s attractiveness compared to stablecoins with greater transparency and compliance with new regulatory standards. The analysts also criticized Tether’s current disclosures, stating that they do not alleviate concerns. They highlighted S&P Global’s weak rating for Tether’s ability to maintain its peg to the U.S. dollar and expressed concerns about significant price risks associated with assets other than U.S. Treasury bills.
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