Asia Tech Wire (Aug 16) -- Increasingly stringent stablecoin regulations could pose a significant challenge to Tether's market dominance, JPMorgan Chase said in a research note on Wednesday.

Under Europe's Markets in Crypto-Assets Regulation (MiCA), 60% of stablecoin reserves must be deposited with European banks, which could force Tether to adjust its reserve management strategy.

Tether has previously come under regulatory scrutiny for a lack of transparency in the composition of its reserves, and the new regulations will further increase pressure on it to disclose detailed information and conduct audits.

JPMorgan believes that Tether's dominant position in the stablecoin market will be threatened if it fails to comply with these new regulations.