U.S. Republican Senator Cynthia Lummis and Democratic Senator Kirsten Gillibrand proposed the latest stable currency bill in mid-April. S&P Global Ratings believes that if the bill is passed, Tether will be eliminated.

Banks are in, Tether is out

S&P Ratings pointed out that the passage of the Stablecoin Act will accelerate the innovation of traditional financial institutions on the blockchain, especially the tokenization or digital bond issuance involving on-chain payments, and as the number of cases of institutions adopting stablecoins increases, it will Banks pave the way for stablecoin issuers and undermine Tether’s dominance.

S&P said:

If the new bill is passed, stablecoin issuers without a banking license will be limited to $10 billion in issuance, giving banks a competitive advantage. In addition, Tether is not a U.S. entity, which means that U.S. entities will not be able to hold or trade USDT.

However, S&P also found that Tether’s trading activities mainly occur in emerging markets outside the United States and are driven by retail investors and cross-border remittances.

Analysts at JPMorgan Chase previously expressed similar views:

(JPMorgan Chase: Stable currency law will be released, the United States can sanction offshore entities, Tether faces severe challenges)

Stablecoin bill may be difficult to implement

The latest joint bill proposed by U.S. Republican Senator Cynthia Lummis and Democratic Senator Kirsten Gillibrand in mid-April will establish a regulatory framework for stablecoin issuers at the state and federal levels and completely ban algorithmic stablecoins.

Nikhilesh De, editor-in-chief of CoinDesk who specializes in global policy and regulation, is not very optimistic about the smooth introduction of the bill. He raised several concerns:

  • This does not stop bad actors from adopting foreign stablecoins.

  • DAI is not an algorithmic stablecoin, and the bill does not provide clear guidance on this.

  • The United States is about to enter election mode in the second half of the year, and senior officials and congressmen may pay less attention to encryption bills.

  • The offering would be capped at $10 billion and would render Circle unable to operate unless it became a state or federally chartered depository institution.

Tether did not respond to requests for comment from CoinDesk and The Block.

In addition, nearly two years have passed since the two congressmen introduced the "draft", and there has been no significant progress.

(The two parties jointly pushed for the encryption bill, with industry insiders shouting for a new milestone and financial reform groups criticizing it. What are the highlights?)

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