Coinbase CEO Brian Armstrong has expressed concerns that upcoming U.S. regulations for stablecoins may require issuers to back their tokens fully with U.S. Treasury bonds.
Coinbase CEO Brian Armstrong has expressed concerns that upcoming U.S. regulations for stablecoins may require issuers to back their tokens fully with U.S. Treasury bonds. Speaking at the World Economic Forum in Davos, Switzerland, Armstrong noted that such measures would promote transparency and security but might challenge offshore issuers like Tether. He indicated that Coinbase would delist tether (USDT) if it fails to comply with any new U.S. legislation.
Despite this, Armstrong reassured that Coinbase will continue offering USDT services in the short term to help users transition to what he described as a “more secure system.” He emphasized the importance of providing customers with an off-ramp to other compliant assets as regulatory frameworks evolve.
In Europe, Coinbase has already delisted Tether and other stablecoins in anticipation of the Markets in Crypto-Assets Regulation (MiCA). However, the company has signaled that relisting is possible if these assets comply with MiCA standards. The stablecoin market, valued at $218.7 billion, remains dominated by its top five assets, which collectively account for 92% of the total market share.
In the U.S., lawmakers are working to establish comprehensive legislation to regulate stablecoins and solidify the U.S. dollar’s role as a global reserve currency. Representative Tom Emmer, vice chairman of the House Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, has identified stablecoin legislation as a top congressional priority. Emmer believes this focus is achievable under a Republican-controlled Congress, particularly following the departure of former Securities and Exchange (SEC) Chair Gary Gensler.
The Payment Stablecoin Act, introduced in April 2024 by Senators Cynthia Lummis and Kirsten Gillibrand, is a key proposal in this effort. Currency under review by the Committee on Banking, Housing, and Urban Affairs, the act seeks to establish clear guidelines for stablecoin issuers, including requirements for full reserve backing and periodic audits. These measures aim to enhance the stability and trustworthiness of stablecoins while preventing misuse in illicit activities.
Armstrong’s statements underscore Coinbase’s alignment with regulatory trends and proactive approach to ensuring compliance. While the company has faced challenges with Tether in Europe, it continues to adapt to regulatory changes, offering users options that align with emerging standards.
As regulatory clarity increases, Armstrong expects the stablecoin market to shift toward more secure and transparent operations. However, the proposed rules could pose significant obstacles for some issuers, particularly those operating outside the U.S., as they strive to meet stringent compliance requirements.
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