While Tether may not be a U.S. entity, American authorities can still exert a certain degree of control over the stablecoin issuer through the Office of Foreign Assets Control (OFAC), according to JPMorgan.

"U.S. regulators can exert some control on Tether's offshore usage via OFAC," JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a report on Thursday. "Tether's association with Tornado Cash, a privacy enhancement platform on the Ethereum network, is an example."

OFAC, a unit of the U.S. Treasury Department, sanctioned Tornado Cash in 2022, alleging it to be a key tool used by malicious actors for money laundering. At that time, Tether said it wouldn't bar Tornado Cash addresses as the company had not yet received any such requests from U.S. authorities. However, last …