Coinbase CEO Brian Armstrong has raised significant concerns regarding the future of Tether (USDT) in light of impending U.S. regulations that may require stablecoin issuers to fully back their tokens with U.S. Treasury bonds. Speaking at the World Economic Forum in Davos, Switzerland, Armstrong highlighted the potential challenges these regulations could pose for offshore issuers like Tether, indicating that Coinbase would be compelled to delist USDT if it fails to comply with any new legislation.
Despite these warnings, Armstrong reassured users that Coinbase would continue to offer USDT services in the short term, aiming to provide a transition path to what he described as a “more secure system.” He emphasized the importance of giving customers an off-ramp to compliant assets as regulatory frameworks evolve.
In Europe, Coinbase has already taken steps to delist Tether and other non-compliant stablecoins in anticipation of the Markets in Crypto-Assets Regulation (MiCA). However, the company has indicated that relisting could occur if these assets meet MiCA standards in the future.
The stablecoin market, currently valued at $218.7 billion, is dominated by a few key players, with the top five accounting for 92% of the total market share. As U.S. lawmakers work to establish comprehensive legislation to regulate stablecoins, Representative Tom Emmer has identified this as a top priority for Congress. Emmer believes that the focus on stablecoin legislation is achievable under a Republican-controlled Congress, especially following the departure of former SEC Chair Gary Gensler.
The Payment Stablecoin Act, introduced in April 2024 by Senators Cynthia Lummis and Kirsten Gillibrand, aims to create clear guidelines for stablecoin issuers, including requirements for full reserve backing and periodic audits. These measures are designed to enhance the stability and trustworthiness of stablecoins while preventing their misuse in illicit activities.
Armstrong’s statements reflect Coinbase’s proactive approach to regulatory compliance and its alignment with emerging trends in the cryptocurrency space. While the company has faced challenges with Tether in Europe, it continues to adapt to regulatory changes, offering users options that align with new standards.
As regulatory clarity increases, Armstrong anticipates a shift in the stablecoin market towards more secure and transparent operations. However, the proposed rules could present significant challenges for some issuers, particularly those operating outside the U.S., as they strive to meet stringent compliance requirements.
