Coinbase CEO suggests USDT could be delisted under regulatory pressure

Brian Armstrong, CEO of Coinbase, revealed that the exchange may have to delist USDT to comply with potential new regulations.

Armstrong was discussing the potential impact of new rules that could require stablecoin issuers to fully back their tokens with US Treasury securities and undergo periodic audits to ensure transparency and financial soundness.

The shifting regulatory landscape

He was the executive to talk He told the Wall Street Journal on the sidelines of the World Economic Forum in Davos, where he emphasized that it would be necessary for his company to adhere to the expected regulations even if it meant removing Tether from its platform.

Armstrong was also keen to point out that Coinbase will continue to offer USDT services to customers to ease their transition to other compatible assets. “We want to help them transition to a system that we believe is safer,” he said.

The exchange has already removed several crypto assets from its European operations to comply with the Markets in Cryptoassets (MiCA) regulation. However, he left the door open for a potential re-listing if the tokens meet the requirements at a “later date.”

One of the biggest criticisms leveled against Tether is that its quarterly certifications, published through BDO Italia, fall short of full audits. In addition, observers argue that the reports may not meet the stringent standards likely to be set by new US legislation.

USDT currently dominates the stablecoin market, making up about 65% of the sector’s value of about $213 billion. Its issuer holds about 80% of its reserves in the form of Treasury bonds, backed by assets such as gold and bitcoin.

At the end of 2024, it added an additional $700 million worth of Bitcoin to its reserves, bringing its total cryptocurrency holdings to $7.8 billion. This came as its closest competitor, Circle, announced a partnership with Binance to help drive global adoption of USDC and reduce USDT’s significant market share.

Tether finds a new home

In April last year, Wyoming Senator Cynthia Lummis, along with her New York counterpart Kirsten Gillibrand, introduced the Stablecoin Payment Act, a bipartisan bill aimed at creating a framework for cryptocurrencies tied to fiat currencies.

If such legislation passes, it could force Tether to change its reserve policies and reporting methods to remain in the United States.

Interestingly, the cryptocurrency company has already begun to shift its focus away from the US and European markets, positioning itself more in emerging economies. It recently announced plans to move operations to bitcoin-friendly El Salvador, in what some see as a strategy to stay outside key regulatory areas.