The dominance of Tether’s USDT is rising among stablecoins amid an ongoing shakeup of the $136 billion stablecoin market.
Tether’s gain came mostly at the expense of rival Binance USD, which has been in rapid decline since its issuer, Paxos, announced on Feb. 13 that it would halt minting new BUSD tokens due to pressure from the New York Department of Financial Services, the state’s top regulator. Since then, BUSD has shrunk below $9 billion from a $16 billion market capitalization.
USDT’s market capitalization has grown some $5.3 billion this year so far to $71.6 billion, with $3 billion of the gains after mid-February. Circle’s rival stablecoin, USD coin (USDC), has also gained $3 billion since the Paxos announcement; however, its $44 billion market cap is still lower than at the start of 2023.
Stablecoins have become the backbone of the crypto economy in recent years, ballooning to a peak market capitalization of$188 billion in May 2022. They peg their price stable to an external asset, such as the U.S. dollar, and serve as a facilitator for trading on exchanges and making transactions between central bank-issued fiat money and the digital asset world.
Tether’s position as issuer of the world’s dominant stablecoin defies its historically opaque reporting about its reserves backing the value of USDT and heavy scrutiny of its internal dealings. Last week, the Wall Street Journal reported that Tether used bank accounts accessed by falsified documents in 2018. In September, a New York judge ordered Tether to present financial records on USDT’s reserve assets in a lawsuit that alleges Tether conspired to issue USDT to prop up the price of bitcoin (BTC), CoinDesk reported.
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