Why stablecoin USDT market share continues to grow

Stablecoin USDT from Tether maintains leadership and grows in volume despite criticism and regulatory attention. Crypto Upvotes expert review

Tether is preparing to release its Q1 earnings report. USDT’s market capitalization reached $85 billion and recovered to its all-time high before the collapse of the Terra ecosystem in May 2022.

Since the beginning of the year, the company has issued $15 billion in new USDT. And stablecoin’s market share has grown another 15%. This growth was partly due to the fact that its closest competitors, Circle’s USD Coin (USDC) and Paxos’ BUSD, were struggling. The former suffered after the collapse of Sillicon Valley Bank. The second was banned by U.S. regulators. The outflow of funds from both stablecoins was in the billions of dollars. And investors probably switched from them to USDT. Which proved to be a more “stable” asset in the period of turbulence in the markets.

According to Blockworks Research, Tether has a 63% market share. Which is the highest in the last two years.

Last week, the company issued another 1 billion USDT, though they have yet to go into circulation. According to Tether’s CTO Paolo Ardoino, this batch of USDT will be used for further USDT issuance requests and inter-network conversions. Tether has a long history of issuing USDT before funds are actually received into accounts. Stablecoin is issued in large volumes at once. And the inclusion of coins in circulation is done as requests are received from users or exchanges.

USDT is issued on 13 blockchains, including Solana, Algorand, BNB Chain or Polygon in addition to Ethereum. There are 35 billion tokens issued on Ethereum. But the largest amount of Stablecoin is on the Tron network – 45 billion USDT. It is USDT in TRC20 standard token format that has become the most popular “stablecoin” due to lower commissions and transaction processing speeds compared to other networks.

Geographical advantage of USDT

Tether is registered in the British Virgin Islands, while the issuers of the other “stablecoins” from the first three are registered in the United States. The approach to regulating stablecoins is particularly acute on the agenda of U.S. lawmakers.

Last week, USDT was discussed at a House Financial Services Committee hearing in Congress. Where the main topic was the lack of federal regulations for stablecoin issuers in the US. Representatives from the local crypto business also took part in the hearing. And including, chief issuer strategist behind USDC Circle Dante Diparte. As well as Austin Campbell, former chief risk officer at Paxos, which previously issued BUSD.

Explaining the dominant position of USDT, the invited experts referred to the “advantage of the first project as a stablecoin” Tether. But they also cited the fact that the issuer is registered outside the U.S. among the main advantages.

Speaking to Bloomberg reporters, Henry Elder, head of the American fund Wave Digital Assets, told DeFi. About the fact that among large investors there is a mass shift from USDC to other, less U.S.-oriented stablecoins. And this will continue as long as the United States remains “irrationally hostile” to cryptocurrencies in general and to Stablecoins in particular.

New players in the market of stablecoins are expected

Kai Sheffield, head of cryptocurrency at Visa, said that the company “has an ambitious roadmap for cryptocurrency products”. In doing so, he published a link to a job page for developers. According to him, the introduction of payments in Stablecoin is what the finance company intends to focus on.

Despite the obvious dominance of USDT, the landscape of the “stablecoin” market is changing. The Binance exchange has refocused on the little-known TrueUSD (TUSD) token after it banned BUSD issuance until this year. The leading platform canceled all zero trading fees. But made an exception for Stablecoin TUSD. The token now represents the largest asset by trading volume on centralized exchanges, paired with Bitcoin.

Analysts suggest that TUSD, which has a 9% share of total trading volume on centralized crypto exchanges. In the coming months, it could take the second place in this indicator after Tether.

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U.S. regulators declared war on BUSD and basically on all stablecoins

Attack of American regulators on BUSD and what consequences will face Binance from impossibility to issue its own stablecoin. Review by Crypto-Upvotes experts

The U.S. Securities and Exchange Commission (SEC) has informed Paxos Trust that it plans to sue it for violating investor protection laws. According to the regulator, Binance USD (BUSD), the third most capitalized stablecoin, is the third-largest. This digital asset, which Paxos issues, is an unregistered security. It is not yet known whether the SEC notice specifically relates to the issuance of BUSD, its listing on exchanges, or both.

The New York State Department of Financial Services (NYDFS) has since ordered Paxos to cease issuing new BUSD tokens altogether. In listing the consequences of stopping the issuance of BUSD, Changpeng Zhao, head of the Binance exchange, admitted. That capitalization of this asset will continue to decline and investors will start to switch to other stablecoins.

Risks to other stablecoins are high

News about banning issue of stablecoin Binance USD (BUSD) had a negative impact on the market. But not as much as from the collapsed FTX exchange. The SEC is investigating the Binance exchange. So Paxos is also in target of the regulator and the New York State Department of Financial Services (NYDFS).

The regulator considers BUSD to be an unregistered security. But with that logic, other stablecoins, USDT and USDC, would also be at risk. Most likely, someone wants to get control of Binance. And creating problems not only for the leading exchange, but also for the whole industry. The risks to other Stablecoins are high.

Binance CEO Changpeng Zhao said he will continue to support BUSD for the foreseeable future. The company predicts that customers will switch to other stablecoins. Therefore, the platform will make changes accordingly.

U.S. regulators declare war on stabelcoins

There are no frontiers for U.S. regulators. All it takes is one American citizen using some platform or protocol. For US regulators to consider these protocols as belonging to their jurisdiction. Attack on stablecoin issuers was expected, the SEC has been saying for years that these companies are not transparent enough. And they don’t comply with U.S. banking laws, don’t have the necessary reserves and so on. If SEC attacked a BUSD issuer, it would be wise to get ready for attacks on other stablecoins, especially USDT and USDC. Given USDT’s majority share of stablecoin market. An attack on them is fraught with a serious crisis in cryptocurrency market and subsequent collapse of all coins without exception.

Our experts note that U.S. regulators have openly declared war on at least Binance itself. In a broader sense, this is a continuation of the fight against stablecoins as an element of opposition to the classical financial system on behalf of the Web 3.0 sphere.

This is a global and extremely important event. It should be taken carefully, and you should read the contents of the documents published by the NYDFS regulator about the ban on continuing to issue BUSD. In fact, it means banning BUSD, but it may be followed by a series of lawsuits.

Our experts are sure that Binance was ready for that. And its management will find a legal and reasonable way out of this situation. Further wide usage of BUSD is out of the question. Perhaps, there will be some alternative or solution. The other major exchanges that issue stablecoins should be prepared for an attack and take some action. In fact, war has been declared on all of them.

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