Tether USDT market cap breaks ATH, Binance CEO points at regulatory caps
The Tether (USDT) stablecoin has hit a new all-time-high (ATH) market capitalization of over $83 billion as its market dominance continues.
The new ATH market cap for USDT comes in a year when other stablecoin issuers struggle to stay afloat due to regulatory woes. The same was pointed out by cryptocurrency exchange Binance’s CEO Changpeng “CZ” Zhao.
In a tweet, CZ drew attention to Binance USD (BUSD), the Binance-branded stablecoin issued by Paxos. The Binance CEO said BUSD, a fully regulated stablecoin, was “capped” by the New York Department of Financial Services (NYDFS) at $23 billion and currently sits at a $5 billion market cap, and since then, USDT has seen tremendous growth.
BUSD, a fully regulated stablecoin, was “capped” (no new minting) by NYDFS at $23b. Now at $5b market cap.
Since then, USDT has seen tremendous growth. https://t.co/KqBkDK71WS
— CZ Binance (@cz_binance) June 1, 2023
In February, the NYDFS ordered Paxos to stop any new issuance of BUSD, citing violations of security laws.
At a time when USDT has reached an ATH market cap, its competitors, such as Circle-issued USD Coin (USDC) and BUSD, are struggling to maintain their market share. The second-largest stablecoin, USDC’s market cap stands at $28.8 billion, a difference of over $50 billion. For context, at one point, USDC’s market dominance was nearing that of USDT, with its market cap reaching an ATH of $55.8 billion in June 2022.
While the prolonged bear market in 2022 took its toll on both the stablecoins which saw a decline in market cap after the June 2022 high. However, USDT has managed to bounce back with a higher market dominance while USDC’s market cap has been cut in nearly half.
Related: Are stablecoins securities? Well, it’s not so simple, say lawyers
The prominent reason for the decline in the market share of other stablecoins can be attributed to regulatory scrutiny shown by United States regulators added to the banking crisis. After a ban on new minting of BUSD alleging security violations, the BUSD market cap dropped rapidly as users started to convert their BUSD for other stablecoins.
Similarly for USDC, the major crisis came in the form of the collapse of the Silicon Valley Bank where the stablecoin issuer held about $3.3 billion in reserves. This led to market panic and a subsequent depegging from the U.S. dollar. Although USDC re-pegged the next day it took a significant toll on its market cap as many converted their USDC to other stablecoins in fear of a total crash.
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Source: Cointelegraph.com
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