The dominance of Tether's USDT may wane as regulatory clarity in the US inspires traditional banks to enter the stablecoin market, according to a report by S&P Global Ratings.
Stablecoins serve as a mainstay in crypto markets where the US dollar is the most popular underlying asset. However, most stablecoin issuers are not subject to specific US regulations. That may change with the introduction of the Lummis-Gillibrand Payment Stablecoin Act last week by U.S. Senators Cynthia Lummis and Kirsten Gillibrand.
Analyst Andrew O'Neill said the new rules could give banks a competitive advantage by limiting institutions without a banking license to a maximum of $10 billion in issuance. With a market value of $110 billion, Tether's USDT is currently the third largest cryptocurrency. Circle's USDC token is the second largest stablecoin with a market value of $34 billion. Both follow the US dollar.
Related News: Analysis Company Warns: "This Massive Event Could Create Selling Pressure on Bitcoin Price in the Coming Weeks, So Watch Out"
O'Neill added that approval of the stablecoin bill would accelerate enterprise blockchain innovation, especially for tokenization or digital bond issuances that involve on-chain payments. This growth in enterprise use cases for stablecoins will create opportunities for stablecoin-issuing banks and could also reduce Tether's dominance in the global stablecoin market.
S&P noted that USDT was issued by a non-U.S. entity and is therefore not a permitted payment stablecoin under the proposed bill. This may mean that US entities cannot hold or trade USDT; This could reduce demand for USDT while also increasing US-issued stablecoins.
*This is not investment advice.
Continue Reading: S&P Published a Report on the Cryptocurrency Market: Issues Warning