Tether’s (USDT) Stablecoin Dominance May Wane Following Proposed U.S. Regulation: S&P

S&P Global Ratings said in a report on Wednesday that regulatory clarity in the U.S. should encourage more traditional financial world banks to enter the stablecoin market, and could also reduce Tether’s dominance of USDT. He said there is.

Stablecoins are a type of cryptocurrency that serves as the basis for crypto markets. U.S. Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (N.Y.) introduced a new stablecoin bill last week that would define how stablecoins would operate in the country. .

Although stablecoins are most commonly pegged to the US dollar, most stablecoin issuers are not subject to specific U.S. regulations, according to the report. this is, Lumis Gillibrand Payment Stablecoin Act last week.

Analyst Andrew O’Neill said: “The new rules could give banks a competitive advantage by limiting the issuance of non-banking institutions to a maximum of $10 billion.” Stated.

Tether’s USDT has a market capitalization of $110 billion, making it the third-largest cryptocurrency, according to CoinDesk data. Circle’s USDC ranks second among stablecoins at $34 billion. Both track the US dollar.

“Approval of the stablecoin bill will accelerate institutional blockchain innovation, particularly tokenization with on-chain payments and digital bond issuance,” O’Neill said, adding, “The stablecoin bill’s approval will accelerate institutional blockchain innovation, especially tokenization with on-chain payments and digital bond issuance.” Expansion will create opportunities for banks,” he added. By becoming a stablecoin issuer, Tether’s dominance in the global stablecoin market could also decline. ”

S&P said USDT is not a stablecoin that would be allowed for payments under the proposed bill because it is issued by a non-U.S. entity. This means that U.S. entities will not be able to hold or trade the currency, which could reduce demand for USDT while at the same time increasing the number of U.S.-issued stablecoins. Still, USDT’s trading activity primarily takes place in emerging markets outside the United States and is driven by retail investors and remittances, the report notes.

The report states, “Removal of the SEC requirement that custodians report digital assets on their balance sheets could lead to the emergence of new providers of digital asset custody services, which would increase competition. It is possible,” he added.

S&P has previously criticized USDT for being weaker than its competitors in fulfilling its core mission of being valued at $1.

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