Coinbase CEO Hints at Possible Tether Delisting Amid Regulatory Shifts

Coinbase CEO Hints at Possible Tether Delisting Amid Regulatory Shifts

Tether’s Compliance Under Scrutiny

Brian Armstrong, CEO of Coinbase, has raised the possibility of delisting Tether (USDT) from its platforms if the stablecoin fails to comply with new U.S. regulations. This development follows a Wall Street Journal (WSJ) report highlighting Coinbase’s complex relationship with the stablecoin, which remains popular among its users. While Armstrong acknowledged the significant number of users holding Tether, he emphasized Coinbase’s commitment to supporting a secure and compliant financial ecosystem.

Armstrong’s remarks come just a month after Coinbase delisted Tether for Eurozone residents, a move reportedly tied to the exchange’s adherence to new European Union rules. These rules require stablecoin issuers to obtain an e-money license and hold a portion of their reserves in cash at regulated banks—a requirement Tether has reportedly resisted.

"There are a lot of people with Tether, and we want to give them an off-ramp. We want to help them transition to a system that we think is more secure," Armstrong stated.

Regulatory Landscape and Potential Impact on Tether

The potential regulatory changes in the United States could further complicate Tether’s position. With the U.S. government’s approach potentially shifting under Donald Trump, two proposed stablecoin bills are gaining attention. These bills would require stablecoin issuers to hold U.S. Treasury bonds, forcing companies like Tether to liquidate non-Treasury assets.

Tether’s financial disclosures last year revealed a net profit of $2.5 billion in Q3 2024 and total cash and cash equivalents exceeding $105 billion. This includes $102.5 billion in direct and indirect U.S. Treasury exposure, alongside $20 billion in other assets like precious metals and secured loans. If enacted, the proposed legislation would compel Tether to convert these alternative holdings into Treasury bonds.

However, the WSJ report noted that neither bill has yet made significant progress in Congress, leaving uncertainty around the timeline and impact of these potential regulations.

Coinbase’s Strategic Position

Coinbase’s cautious stance on Tether aligns with its broader strategy of promoting transparency and regulatory compliance within the cryptocurrency sector. As a shareholder in Circle, the issuer of the competing stablecoin USD Coin (USDC), Coinbase has a vested interest in supporting stablecoins that align with emerging regulatory frameworks.

Earlier moves, such as the Eurozone delisting, highlight Coinbase’s willingness to adapt its offerings to meet regulatory requirements. Armstrong’s comments suggest that while Coinbase aims to provide Tether users with options, its focus remains on fostering a more secure and regulated ecosystem.

As the regulatory landscape evolves, Coinbase’s decisions on stablecoin offerings will likely play a key role in shaping market dynamics and influencing user preferences.