The regulatory efforts for stablecoins are intensifying in the United States. Standard and Poor’s (S&P) highlighted the lack of laws as one of the major obstacles to the adoption of stablecoins. JPMorgan mentioned that adapting to the new regulations could be challenging 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. They serve a critical function in international money transfers and on-chain transactions. However, according to S&P, the lack of regulation in the US limits investor confidence and hinders major institutional players from embracing stablecoin usage. S&P Global Ratings stated, “The lack of regulation is one of the key factors preventing the adoption of stablecoins in the US. Establishing a clear framework will enable broader corporate use of these assets.” NEW REGULATIONS WILL SHAPE THE MARKET Two important bills aimed at regulating the stablecoin market are currently under discussion in the US Congress. The US Stablecoin Tethering and Bank Licensing Enforcement Act (STABLE) proposed by the House demands the application of state regulations without any conditions. Both regulatory initiatives require stringent audits for stablecoin issuers regarding transparency and reserve management. The S&P report emphasized that once the regulatory framework becomes clearer, some users are expected to transition from unregulated stablecoins to regulated ones, potentially altering the sector’s dynamics. TETHER MAY COME UNDER PRESSURE Tether (USDT), holding the largest share in the stablecoin market, may face pressure due to the proposed regulations. In a report released last week, JPMorgan expressed that Tether could struggle to comply with US regulations. JPMorgan analysts suggested that the market leader Tether might lag behind alternative stablecoin projects due to these regulations. Particularly, regulatory-compliant stablecoin projects like USDC issued by Circle are believed to become more appealing to institutional investors. Experts predict that with the enforcement of regulations, banks and financial institutions may become more inclined towards the use of stablecoins. According to S&P’s analysis, stablecoins will play an increasingly critical role in on-chain transactions in the future. The report indicated that users in developing markets might 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.