The Tether (USDT) stablecoin hits a new all-time high (ATH) market cap of over $83 billion as its market dominance continues.
USDT’s new ATH market cap comes in a year when other stablecoin issuers are struggling to survive due to regulatory difficulties. Changpeng “CZ” Chao, CEO of crypto exchange Binance, made a similar point.
In his tweet, CZ drew attention to Binance USD (BUSD), a Binance branded stablecoin issued by Paxos. Binance CEO says BUSD, a fully regulated stablecoin, has been “capped” by the New York Department of Financial Services (NYDFS) to $23 billion and currently has a market cap of $5 billion, and USDT has since He said it has grown tremendously.
In February, the NYDFS ordered Paxos to stop issuing new BUSD for violating national security laws.
With USDT reaching ATH market cap, competitors such as Circle-issued USD Coin (USDC) and BUSD are struggling to maintain market share. The second largest stablecoin, USDC, has a market capitalization of $28.8 billion, more than $50 billion behind USDT. For context, at one point USDC’s market power approached that of USDT, and its market cap reached $55.8 billion in ATH in June 2022.
A prolonged bear market in 2022 hit both stablecoins, causing market caps to fall after June 2022 highs. However, while USDT managed to bounce back by gaining market power, USDC’s market capitalization was cut in half.
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The main reasons for the decline in market share of other stablecoins can be attributed to regulatory oversight by US regulators and the US banking crisis. After BUSD was banned from new mintage due to security breaches, its market capitalization plummeted as users began exchanging BUSD for other stablecoins.
Similarly, a major crisis for USDC came with the collapse of Silicon Valley Bank, where the stablecoin issuer held about $3.3 billion in reserves. This caused market panic and the subsequent depegment from the US dollar. USDC regained its peg the next day, but fearing a complete crash, many users exchanged USDC for other stablecoins, causing significant damage to the market cap.
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