Tether Holdings, the entity behind the largest stablecoin USDT, is expanding its market dominance amidst record profits, which JPMorgan Chase & Co. sees as a potential risk to the broader cryptocurrency market. As USDT approaches a circulation milestone of $100 billion, concerns arise over Tether's "lack of regulatory compliance and transparency," despite its pivotal role in providing stability within the volatile crypto trading environment.

Tether's increasing market share has solidified USDT as the primary stablecoin choice, prompting Tether's chief executive, Paolo Ardoino, to defend the company's engagement with global regulators and its efforts to educate them about the technology.

The impending regulatory changes in the US and Europe, including the Clarity for Payment Stablecoin Act in the US and the Markets in Crypto-Assets Regulation (MiCA) in the EU, could reshape the stablecoin landscape. JPMorgan analysts suggest that stablecoin issuers already in line with regulations may gain market share as a result.

Despite Tether's efforts to boost transparency through quarterly attestations, especially after a $41 million fine by the CFTC in 2021 for misleading statements about its reserves, it still falls behind its competitor Circle in regulatory compliance for its USDC token. USDC holds the position as the seventh-largest digital token with a market cap of around $27 billion, while Tether remains the most traded cryptocurrency, trailing only Bitcoin and Ethereum in market capitalization.