The US dollar-pegged stablecoin regime has undergone some changes over the past year. While most of them are in decline, Tether USDT ($1.00) rose to its all-time high, according to data from CoinGecko. In the last 12 months, Circle USD coins USDC ($1.00) saw its market share fall from 34.88% to 23.05% at the time of writing.
Binance USD exchange rate BUSD ($1.00) decreased from 11.68% to 4.18% in the same period, where Dai’s DAI ($1.00) crypto market share was 3.66%, down to 4.05% in May 2022.
Meanwhile, Tether’s USDT is gaining traction. The market dominance of the stablecoin is currently at 65.89%, down from 47.04% a year ago. Its market capitalization reached $83.1 billion, while USDC market share fell from a high of $55 billion to just $29 billion.
In a recent interview with Bloomberg, Circle CEO Jeremy Allaire blamed US regulators’ crypto crackdown for the stablecoin’s market decline. The current situation in the United States seems to be beneficial for Tether.
The banking crisis in the US led to the expansion of USDC in March as a fund worth $ 3.3 billion was linked to Silicon Valley Bank, one of the three crypto-friendly banks closed by regulators. Despite Circle’s assurances, the market reacted quickly to the news, causing the USDC to fall against the dollar.
With the growing connection between the crypto space and traditional currencies, stablecoins have become increasingly popular. A recent report from the European Systemic Risk Board highlighted the need for greater transparency in the digital asset market, particularly for stablecoin pools.
Tether has been widely criticized for its lack of transparency over the past few years. Owned by Hong Kong-based iFinex, the New York attorney’s office fined the crypto company $18.5 million in 2021 for allegedly falsely asserting fiat support of its securities. As part of the settlement, the stablecoin issuer is also required to provide greater financial transparency. Tether management responded to the negative allegations on Twitter. In addition, the company is looking to reduce its exposure to the banking system following the failure of Silicon Valley Bank.
Its latest research report shows that Tether withdrew more than $4.5 billion from the bank in the first quarter of 2023, leading to a “significant reduction” in the risk of its counterparties despite the uncertainty of assets and the world’s wealth now.
The company increased its US assets to more than $53 billion, or 64% of its reserves. Combined with other assets, USDT is currently supported by 85% cash, equity and short-term deposits, according to the report.
Circle made a similar decision. The stablecoin operator is said to have adjusted its reserves to reduce risk despite economic uncertainty and is not holding Treasury bond yields higher than early June.
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