Coinbase Considers Delisting USDT Amid New Regulatory Pressures

• Proposed U.S. laws, like the Payment Stablecoin Act, could require full U.S. Treasury backing and regular audits for stablecoins.
• Tether’s reserve practices and quarterly attestations might not meet the stringent new standards, prompting operational shifts.
• Coinbase adapts to regulations by delisting non-compliant assets and prioritizing secure, transparent alternatives.

Coinbase CEO Brian Armstrong has disclosed that the cryptocurrency exchange might delist Tether’s USDT due to impending regulatory changes. The potential regulations could require stablecoin issuers to back their tokens with U.S. Treasury bonds fully and undergo regular audits to ensure compliance. 

Regulatory Shifts Could Redefine Stablecoin Practices

Armstrong’s remarks align with broader discussions about stablecoin transparency and accountability. The proposed regulations aim to improve financial integrity and minimize risks associated with unverified reserves.

Tether’s current practice of publishing quarterly attestations through BDO Italia has drawn criticism for lacking comprehensive audits. Observers believe these practices might fail to meet the stringent standards anticipated by the new U.S. laws.

Senators Cynthia Lummis and Kirsten Gillibrand propose the bipartisan Payment Stablecoin Act to establish rules for digital assets. When this law becomes applicable, Tether will need to make its reserve policies more transparent and follow U.S. reporting standards.

The company backs its digital currency assets with 80% U.S. Treasury bills supported by extra investments in gold and Bitcoin. In late 2024, the issuer increased its Bitcoin reserves to $7.8 billion by adding $700 million worth of the cryptocurrency.

Coinbase’s Approach to Compliance

Coinbase has already made adjustments in other regions to align with local regulations. In Europe, the platform removed several cryptocurrencies to comply with the Markets in Crypto Assets (MiCA) framework. 

Armstrong indicated that assets removed from the platform could be relisted if they meet future compliance requirements. Similarly, Coinbase plans to support customers transitioning to more secure assets while potentially removing non-compliant stablecoins like USDT.

Amid increasing scrutiny, Tether has begun reducing its reliance on U.S. and European markets. The company recently announced plans to relocate operations to El Salvador, a nation recognized for its Bitcoin-friendly policies.

This move aligns with Tether’s strategy to expand in emerging economies and operate outside heavily regulated zones. As of January 2025, USDT dominates 65% of the stablecoin market, valued at $213 billion.