US cryptocurrency regulations conflict with CBDC and incompatible stablecoins such as Tether: JPMorgan

• JPMorgan said regulatory initiatives around cryptocurrencies have been increasing in the U.S. in recent months.

• According to the bank, the stablecoin bill is likely to be approved before the presidential elections and, if passed, poses a threat to tether’s dominance.

• Issuing a central bank digital currency is less likely after the House passed a bill last month barring the Federal Reserve from doing so, the bank said.

U.S. cryptocurrency regulation appears to be moving in a direction that opposes the introduction of a central bank digital currency, is at odds with local banks’ adoption of cryptocurrencies, and is averse to non-compliant stablecoins, JPMorgan (JPM) said in a research report.

The bank notes that regulatory initiatives have increased in the US in recent months, raising questions about the direction of cryptocurrency regulation ahead of the presidential elections later this year.

Emerging regulatory initiatives appear to be “against Fed coins, against U.S. banks engaging in cryptocurrencies, against non-compliant stablecoins such as tether {{USDT}}, and against the blanket classification of all tokens beyond bitcoin {{BTC}} and ether { {ETH}} as securities,” analysts led by Nikolaos Panigirtzoglou wrote in a Wednesday report.

The Transparency in the Stable Coin Payment Act the report shows it has a better chance of being approved before the November election than three other initiatives. If passed, the bill would strengthen but pose risks to the stability of U.S.-compliant stablecoins advantage incompatible stablecoins such as tether.

Stablecoin is a type of cryptocurrency that is usually pegged to the US dollar, although other currencies and assets such as gold are also used.

The Act on financial innovations and technologies for the 21st century (FIT21), which passed the House of Representatives last month, must still be approved by the Senate and ultimately by the president. This is unlikely to happen before the elections, the bank said.

JPMorgan notes that Congress passed a resolution invalidating accounting rule SAB 121, which made it more difficult for banks to hold crypto assets, but the resolution was vetoed by President Joe Biden.

The state anti-Central Bank Surveillance (CBDC) law is an attempt to block the U.S. CBDC and prevents Federal Reserve Banks from offering certain products to consumers and using central bank digital currency for monetary policy purposes, the report added. The House passed the bill prohibition Federal Reserve from issuing a CBDC last month, but its prospects in the Senate are unclear.

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