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- Tether’s market share among stablecoins has increased by 54%, reaching the highest level in 15 months.
- This increase in market share is due to the recent issue regarding its rival BUSD, where its issuer Paxos stopped issuing the stablecoin at the direction of the New York Department of Financial Services.
- The increase is also due to the USDC depeg that happened during the weekend.
Tether (USDT), the stablecoin of Tether Limited Inc., recently recorded a 54% increase in its market share among stablecoins–the largest market share it has reached since late November 2021.
According to the data from CoinGecko, it is the top stablecoin in the market with the current market capitalization being up by 5.4% for the last 30 days and currently valued at $71,717,254,846. It is followed by Centre’s USD Coin (USDC) and Paxos’ Binance (BUSD)—USDC are relatively stable and currently up by 3.8%, however BUSD slumped by 48.1%.
Tether’s increase in market share is being credited to the recent issue regarding its rival BUSD where its issuer Paxos stopped issuing the stablecoin at the direction of the New York Department of Financial Services. This was after the threat of the U.S. Securities and Exchange Commission (SEC) to take legal action against the firm for issuing their stablecoin Pax Dollar (USDP) and BUSD tokens. (Read more: US SEC to Sue Crypto Trust Paxos Over Binance Stablecoin BUSD)
Accordingly, on February 13, Paxos announced that it will cease issuance of new BUSD tokens. In a statement, they assured that the firm will “continue to manage BUSD dollar reserves. All BUSD tokens issued by Paxos Trust have and always will be backed 1:1 with US dollar-denominated reserves, fully segregated and held in bankruptcy remote accounts.”
Additionally, one of the reasons why Tether’s market share increased is because of the brief depegging of USDC.
Circle Internet Financial’s USDC stablecoin, the second-largest stablecoin with a market cap of $42 billion, temporarily lost its peg to the U.S. dollar due to contagion from the collapse of Silicon Valley Bank.
The USDC/USDT trading pair dropped as low as $0.94 on Kraken, the lowest price since April 2021, but recovered to around $0.984 on Saturday.
Some of USDC’s cash reserves were parked at Silicon Valley Bank, which was shut down by regulators on Friday after suffering a run on deposits. Circle said that $3.3 billion in cash deposits remained at Silicon Valley Bank, representing about 8% of the total reserves backing USDC. (Read more: News Bit: USDC Depegs From One Dollar)
What are Stablecoins?
A stablecoin is a type of cryptocurrency that is pegged to a fiat or to a real-life currency. It has three kinds; fiat-backed, crypto-backed and Algorithmic. (Read more: [Guide] Stablecoins 101 | Introduction to Stablecoins)
In September 2022, the US Congress stated that they are drafting a legislation that would place a ban on algorithmic stablecoins–stablecoins that offer improved price stability without any collateral. According to the lawmakers,they will first study the instruments on the coins and the bill would make it temporarily illegal to issue or create new coins during a two-year period. (Read more: US Solons Eye to Ban Algorithmic Stablecoins for 2 Years)
This was after the collapse of the largest stablecoin by market cap, Terra UST, where it crashed to as low as $0.946—stablecoins are supposed to maintain a 1:1 ratio to fiat. The crash resulted in $60 billion worth of losses. (Read more: Newsletter: What happened to USDT, UST, and LUNA | May 12, 2022
Recently, Coins.ph CEO, Wei Zhou, claimed that stablecoins will be the key to crypto mass adoption rather than Bitcoin. He argued that stablecoins’ feasibility to be used for transactions are more possible because of its price stability, unlike Bitcoin’s volatility and price appreciation aspect. (Read more: Coins.ph CEO: Stablecoins to Play Key Role in Crypto Mass Adoption)
This article is published on BitPinas: Tether’s USDT Stablecoin Market Share Reaches Highest Level in 15 Months
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