The market dominance of stablecoins pegged to the US dollar has undergone some changes over the past year. While most of them are in a downtrend, Tether (USDT) has surged to an all-time high, according to data from CoinGecko. Offers.
Over the past 12 months, Circle’s USDC has seen its market share drop from 34.88% to 23.05% at the time of writing. Binance USD (BUSD) market participation fell from 11.68% to 4.18% over the same period, while Dai (DAI) maintained its participation rate at 3.66%, down from 4.05% in May 2022.
Tether’s USDT is moving in a mixed direction. Stablecoin market dominance is currently at 65.89% from 47.04% a year ago. Its market capitalization rose to $83.1 billion, while USDC’s market cap fell to $29 billion from a peak of $55 billion.
In a recent interview with Bloomberg, Circle CEO Jeremy Allaire blamed a cryptocurrency crackdown by US regulators for the decline in the stablecoin’s market cap. The current environment in the US seems to be beneficial for Tether.
The US banking crisis de-pegged the US dollar in March as $3.3 billion worth of reserves were suspended at Silicon Valley Bank, one of the three crypto-friendly banks shut down by regulators. Despite Circle’s assurances, the market reacted quickly to the news, causing the USD to unpeg the dollar.
With the growing connection between the crypto space and traditional finance, stablecoins are becoming increasingly popular. A recent report by the European Systemic Risk Board highlighted the need for more transparency in the digital asset market, specifically stablecoin reserves.
Tether has come under fire for its lack of transparency over the past years. Owned by Hong Kong-based iFinex, the crypto company was fined $18.5 million in 2021 by the New York Attorney General’s Office for allegedly misrepresenting legal backing for its reserves. As part of the settlement, the stablecoin issuer was also required to provide greater financial transparency.
Tether leadership fight Back against negative allegations on twitter. In addition, the company is seeking to reduce its exposure to the banking system in the wake of the Silicon Valley bank collapse. Its latest audit report shows that Tether withdrew more than $4.5 billion from banks in the first quarter of 2023, resulting in a “significant reduction” in counterparty risk amid ongoing global economic uncertainty.
The company also raised US Treasury bills to a new high of more than $53 billion, or 64% of its reserves. Along with other assets, USDT is now backed by 85% in cash, cash equivalents and short-term deposits, according to the report.
A similar step was taken by the department. The stablecoin operator has reportedly adjusted its reserves to mitigate risks in the face of macroeconomic uncertainty, and is no longer holding Treasury notes due after early June.
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