• JPMorgan warns that the growing dominance of Tether (USDT) is negative for the crypto ecosystem and its stability.
• Other stablecoins, such as USD Coin (USDC), could benefit and gain market share following stricter regulation.

The rising hegemony of the Tether stablecoin (USDT) is exerting a deleterious influence on the crypto arena as a whole, according to a detailed study presented by JPMorgan (JPM) last Thursday.

The bank’s report expresses concern over the progressive accumulation in Tether over the past year, deeming it pernicious to both the stablecoin universe and the crypto ecosystem as a whole.

Stablecoins are currently facing regulatory challenges in several legislative areas, and Tether is particularly exposed due to its deficiency in regulatory compliance and lack of clarity in its operations, according to analysts under the guidance of Nikolaos Panigirtzoglou.

However, a window of opportunity is expected for other stablecoins, as those issuers that have remained compliant with current regulations could take advantage of any subsequent crackdown, thereby increasing their market share, as the bank’s analysis indicates.

USD Coin (USDC), which has signaled its intention to go public in the U.S., could emerge as one of the big winners, as it “appears to be undertaking an expansion into several jurisdictions and is proactively preparing for future regulations on stablecoins, the report said.

JPMorgan notes that Tether has seen significant growth in terms of both market capitalization and market share in recent times, with massive adoption on both centralized cryptocurrency exchanges and decentralized finance platforms (DeFi) .

The previous week, the stablecoin issuer reported a record $2.85 billion in revenue for the past quarter and stated that its flagship token is close to reaching a $100 billion market cap.

In addition, the stablecoin has capitalized on the “commotion” in competitors such as Binance’s USDC and BUSD, according to the paper.