As a professional translator, I would translate the news article as follows:
Morgan Stanley analysts believe that Tether faces significant risks due to a lack of regulatory compliance and transparency, and its growing dominance is causing concern. At the same time, analysts mention that Tether’s competitor, Circle, seems to be actively preparing for upcoming stablecoin regulations.
Table of Contents:
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Viewing Tether’s Increasing Concentration as a Negative Factor
Response from Tether’s CEO
Reviewing Recent Actions by USDC Issuers
Cryptocurrency Venture Capital Firms More Cautious in Capital Allocation
Viewing Tether’s Increasing Concentration as a Negative Factor
According to The Block’s report, JPMorgan believes that while the recent growth in stablecoin market cap is encouraging, Tether’s growing dominance is causing concern.
In a report on Thursday (1st), Morgan Stanley analysts led by Nikolaos Panigirtzoglou wrote:
Analysts state that stablecoin issuers face regulatory risks worldwide. In the United States, the “Stablecoin Clarity Act” is awaiting congressional approval. Meanwhile, in Europe, the “Markets in Crypto-Assets Regulation” (MiCA) is expected to be partially implemented in June this year. Therefore, analysts believe that stablecoin issuers who strictly comply with current regulations will benefit from upcoming regulatory scrutiny and may gain market share.
Response from Tether’s CEO
Regarding Morgan Stanley’s comments, Tether’s CEO Paolo Ardoino told The Block:
Ardoino added that the success of Tether USDT is due to its financial reliability, strong reserves, and commitment to emerging markets and developing countries. In these regions, the entire community uses USDT as a lifeline to protect their families from high inflation and depreciation of their national currencies.
Reviewing Recent Actions by USDC Issuers
Circle, the issuer of the stablecoin USDC, recently secretly submitted an IPO application in the United States. Morgan Stanley analysts state that this move shows Circle’s intention to expand into international markets and actively prepare for upcoming stablecoin regulations.
Analysts state that stablecoins act as a bridge between traditional finance and the crypto world, serving as the “cash” in the crypto space. The expansion of stablecoins means more funds entering the crypto space from traditional finance, increased circulation of cash in the sector, and an increase in collateral, making the cryptocurrency financial system more stable.
However, analysts believe that Tether’s growing market share and regulatory uncertainties are detrimental to the market. This week, Tether released its 2023 Q4 audit report signed by international independent audit firm BDO, which showed a record-breaking net profit of $2.85 billion in the fourth quarter and USDT over-reserves of $5.4 billion.
Cryptocurrency Venture Capital Firms More Cautious in Capital Allocation
In addition to stablecoins, Morgan Stanley analysts also mentioned that venture capital funds are another major source of funding for the cryptocurrency ecosystem. However, after showing improvements in cryptocurrency financing in November last year, it receded again in December 2023 and January 2024. Analysts state:
Analysts state that cryptocurrency venture capital firms are now more cautious in capital allocation and tend to choose mature projects and those focused on Web3 infrastructure. They also note that the growing demand for artificial intelligence (AI) is attracting funds that may have been invested in blockchain and cryptocurrency projects.
