Coinbase CEO: Stricter Rules May Lead to USDT Removal

Coinbase CEO Brian Armstrong has suggested that the exchange might delist USDT to comply with stricter regulations anticipated in the U.S. These potential rules could require stablecoin issuers to fully back their tokens with U.S. Treasury bonds and undergo regular audits to ensure transparency and financial soundness.

Regulatory Challenges for Coinbase

Speaking at the World Economic Forum in Davos, Armstrong emphasized Coinbase’s commitment to compliance, even if it necessitates removing Tether from its platform. However, he assured that Coinbase would assist users in transitioning to compliant assets. “We want to help them move to a system that’s more secure,” Armstrong stated.

Coinbase has already delisted several tokens in Europe to align with the Markets in Crypto Assets (MiCA) regulations. While these removals are currently enforced, the exchange has indicated that relistings could occur if tokens meet future regulatory standards.
Critics argue that Tether’s quarterly attestations, provided by BDO Italia, lack the rigor of full audits. This, combined with growing scrutiny, has fueled speculation about its ability to adapt to stricter U.S. requirements.

Shifting Dynamics in the Stablecoin Market

USDT dominates the stablecoin market, holding 65% of the sector’s $213 billion valuation. While its reserves are primarily in Treasury bills, Tether has diversified with assets like gold and Bitcoin, including $700 million worth of BTC added in late 2024.

As regulatory pressures mount, Tether is shifting its focus to emerging markets, recently announcing plans to move operations to El Salvador. This move signals its intent to navigate outside major regulatory zones as competitors like Circle gain ground through global partnerships to promote USDC adoption.

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