Brian Armstrong, CEO of Coinbase Global, has confirmed that the cryptocurrency exchange would remove the stablecoin Tether (USDT) from its U.S. trading platform if it is required to comply with new legislation.
Speaking at the World Economic Forum in Davos, Switzerland, Armstrong highlighted Coinbase’s commitment to regulatory compliance and emphasized the need to provide customers with a secure and legal cryptocurrency trading environment.
Brian Armstrong Confirms Tether Delisting If Noncompliant
Tether, the most traded cryptocurrency globally, is pegged 1:1 to the U.S. dollar. However, it has been under pressure from regulators for its connection to criminal groups, sanctions bypassers, and terrorists to transfer money. Brian Armstrong mentioned that Coinbase will follow any U.S legislation on stablecoins and may delist Tether if it does not meet new legal standards.
Speaking to Charles Forelle, the Deputy Editor-in-Chief of The Wall Street Journal in Davos, Armstrong noted,
“There are a lot of people with Tether, and we want to give them an off-ramp to transition into a system that we think is more secure.”
Coinbase had earlier suspended Tether for its European users following the release of new European Union laws on digital currencies. These laws limit the stablecoin issuers to keep a part of the reserves in cash with the banks. Even though Tether has spoken out against these rules, stating that there are some risks, other stablecoin issuers, including Circle’s USDC, have stated that they will conform to the EU’s MiCA regulation.
Potential U.S. Stablecoin Laws Could Force Industry Changes
In the US, there are two bills that have been proposed in an attempt to regulate stablecoins, one of which seeks to bar offshore and unregulated entities like Tether from issuing the coins. Although these bills have not been moved forward, Brian Armstrong believes that the future legislation will likely support that stablecoin issuers should hold 100% of their reserves in the US Treasury bonds and should also be subjected to frequent audits.
Tether’s issuer is incorporated in the British Virgin Islands and states that its stablecoin is mainly backed by the U.S. Treasury bonds, but also by gold, Bitcoin, and other loans. Tether has not yet provided its financial statements that have been audited in full, which is problematic for the regulators. On the other hand, Circle, a U.S based stablecoin issuer which Coinbase is an investor in, has defended that its USDC stablecoin is in line with the current and developing regulations.
Brian Armstrong restated Coinbase’s position on operating within the legal framework but offering its clients the tools for transitioning into compliant assets. This is in line with company’s initiatives to meet and uphold the increasing legal requirements that govern the use of its platform.
Tether’s Strategic Moves Amid Growing Regulatory Pressure
To address the emerging complications from the authorities, Tether has taken some important steps. Kraken has recently announced the introduction of a new stablecoin, USDT0, to be issued on the Kraken’s Layer 2 blockchain platform, Ink. The launch is to facilitate easy cross-chain swapping of USDT0 by integrating the Omnichain Fungible Token (OFT) standard for efficient asset exchange.
Furthermore, Tether has moved its headquarters to El Salvador following the approval of the Digital Asset Service Provider (DASP) license. This move is in tandem with El Salvador’s embrace of crypto and helps Tether maintain its presence in more permissive jurisdictions.
Despite these efforts, Tether remains under investigation by U.S. authorities. The Justice and Treasury Departments are probing potential violations of sanctions and anti-money-laundering regulations. Tether has stated that it cooperates with law enforcement to combat illicit activities.
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