According to CEO Brian Armstrong, Coinbase would delist Tether’s USDT stablecoin if compelled by new legislation. A few current attempts to rework US crypto legislation would impact the firm, but they have not advanced yet.
So far, Tether has suffered a minor setback from the EU’s MiCA legislation, but a similar effort in the US could seriously disrupt its operations.
US Legislative Changes Could Challenge Tether
Brian Armstrong, the CEO of Coinbase, has been vocal about the previous government’s crackdown on crypto. The exchange faced significant challenges from the SEC under Gensler’s leadership.
Although a US Court sided with his firm in the SEC legal battle, the CFTC issued a subpoena against it. Additionally, Armstrong accused the FDIC of withholding key documents.
However, the exchange has welcomed the positive regulatory changes under the new government. Armstrong claims that Coinbase would delist Tether’s USDT if compelled.
“There are a lot of people with [USDT], and we want to give them an off-ramp, if we want to help them transition to a system that we think is more secure,” Armstrong said.
Armstrong added that US legislators may force Tether and other stablecoin issuers to hold their reserves in US Treasury bonds and pass regular audits. Tether holds much of its reserves in Treasury bonds, but also maintains reserves in commodities like Bitcoin or gold.
This particular issue also caused notable challenges for USDT in the EU under the new MiCA regulation.
In other words, Armstrong predicts that a similar issue may happen with Tether in the future. In this event, he would cooperate with delisting requirements, just like EU exchanges did.
Additionally, Coinbase is a major shareholder in Circle, a smaller stablecoin that directly challenged Tether’s European market dominance.
“The stablecoin scene’s worth $218.7 billion, and this move could change the game, especially with the US pushing to keep its dollar on top. This could be the beginning of some major shakeups for Tether and its competitors,” Mario Nawfal posted on X (formerly Twitter).
In other words, although the US is heading towards a new pro-crypto regulatory paradigm, enforcement actions are still possible, especially for non-US crypto entities.
Armstrong mentioned that the Senate introduced two bills that would impose these restrictions on Tether, but neither of them have advanced yet. Even though Tether moved to El Salvador recently, it still needs the US market.
Ultimately, it’s anyone’s guess as to how likely these regulations are to pass. The US crypto space is agitating for a comprehensive new regulatory framework, which would almost certainly impact Tether.
Armstrong wished to signal that Coinbase is prepared to cooperate with this framework, even if it ends up sidelining Tether.
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