As of July 2024, Tether (USDT) has achieved a remarkable milestone with its circulating supply reaching $113.13 billion. This significant achievement underscores the stablecoin’s growing prominence in the aftermath of the March 2023 collapse of Silicon Valley Bank (SVB).
The collapse of SVB was a pivotal moment for the stablecoin market, which saw a dramatic shift as traditional financial institutions sought refuge in USDT for its perceived stability. Data from IntoTheBlock (ITB) highlights this transition, noting that the event marked a substantial turning point as investors and traders flocked to USDT for its liquidity and reliability.
Vincent Maliepaard, marketing director at ITB, explained to Cointelegraph that USDT’s dominance is largely due to its accessibility and liquidity. “USDT has become the go-to stablecoin for traders and investors,” Maliepaard said, emphasizing that these factors have cemented its leading role in the stablecoin ecosystem.
In the broader context of the stablecoin market, growth has been notable. Market capitalization surged from $137.86 billion in December 2022 to approximately $150 billion by July 2024, according to ITB data. This expansion reflects increasing global exposure and regulatory advancements, such as the new Swiss Financial Market Supervisory Authority (FINMA) stablecoin issuer guidelines. These developments are enhancing trust and liquidity in the stablecoin sector, with significant transactions exceeding $100,000 for various stablecoins, including DAI, FDUSD, and USDM.
Circle USD (USDC) has also made regulatory strides, becoming the first global stablecoin issuer to align with the European Union’s Markets in Crypto-Assets (MiCA) regulatory framework in July. Despite these advancements, USDC’s $33.71 billion market capitalization pales in comparison to USDT’s $113.13 billion, highlighting the vast gulf between the leading stablecoin and its competitors.
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However, USDT’s success is not without controversy. An Elliptic Research report from July 10 revealed that Huione Group, a Cambodian conglomerate, was implicated in facilitating online scams in Southeast Asia. The report detailed transactions exceeding $11 billion linked to money laundering and cyber scams, predominantly involving USDT. Despite these issues, the use of USDT has made it easier to trace illicit funds due to its blockchain-based digital ledger, compared to traditional fiat flows.
In summary, Tether’s continued dominance in the stablecoin market is a testament to its role in providing stability and liquidity. Yet, the market must navigate regulatory and ethical challenges as it evolves in the wake of significant financial upheavals and global scrutiny.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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