Regulatory efforts for stablecoins are accelerating in the United States. Standard & Poor’s (S&P) highlighted the absence of laws as one of the biggest obstacles to the adoption of stablecoins. JPMorgan indicated that compliance with these new laws might be difficult for Tether (USDT). Stablecoins are cryptocurrencies pegged to the value of the US dollar, gold, or other assets, playing a significant role in the crypto markets, especially for international money transfers and on-chain transactions. However, according to S&P, the lack of regulation in the US limits investor confidence and hampers large institutional players from embracing stablecoin usage. S&P Global Ratings stated, “The lack of regulation is one of the major factors hindering the adoption of stablecoins in the US. Establishing a clear framework will enable broader institutional use of these assets.” UPCOMING REGULATIONS TO SHAPE THE MARKET Two important bills in the US Congress aim to regulate the stablecoin market. The US Stablecoin Innovation and Investment for National Guidance (GENIUS) Act crafted by the Senate mandates federal regulation for stablecoins with a market value exceeding $10 billion, with provisions for state regulations to remain valid if compliant with federal rules. Conversely, the STABLE Act proposed by the House demands the implementation of state regulations without any conditions. Both regulatory initiatives require stricter oversight on transparency and reserve management for stablecoin issuers. In the S&P report, it is noted that as the regulatory framework becomes clearer, some users are expected to transition from unregulated stablecoins to regulated ones, potentially altering industry dynamics. TETHER MAY BE UNDER PRESSURE Tether (USDT), the largest player in the stablecoin market, could face pressure due to the proposed regulations. In a recent report, Wall Street bank JPMorgan (JPM) mentioned that Tether may struggle to comply with US regulations. JPMorgan analysts expressed concerns that Tether, a market leader, could lag behind in light of these regulations compared to alternative stablecoin projects. Particularly, stablecoin projects with high regulatory compliance like USDC issued by Circle are believed to become more attractive to institutional investors. Experts anticipate that with regulations in place, banks and financial institutions may become more willing to use stablecoins. According to S&P’s analysis, stablecoins will play an increasingly critical role in on-chain transactions in the future. The report indicates that users in emerging markets may increase their use of stablecoins to avoid fluctuations in local currencies. Moreover, the greater preference for stablecoins in global payment systems could intensify competition between banks and fintech companies.