“An approval of the stablecoin bill would accelerate institutional blockchain innovation, in particular for tokenization or digital bond issuances involving on-chain payments,” O’Neill said, adding that the “growth of institutional use cases for stablecoins would create opportunities for banks as stablecoin issuers and may also reduce tether’s dominance in the global stablecoin market.”
S&P said that USDT is issued by a non-U.S. entity and therefore is not a permitted payment stablecoin under the proposed bill. This means that U.S. entities can’t hold or transact in it, which could reduce USDT’s demand while at the same time giving a boost to U.S.-issued stablecoins. Still, USDT transaction activity is located mainly outside the U.S. in emerging markets and is driven by retail investors and remittances, the report noted.
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