Record-Breaking Market Cap of $83.2B Achieved by Tether, Defying Stablecoin Market Slump

A stablecoin called USDT, issued by Tether, has achieved its previous all-time high market capitalization, despite a decline in the overall stablecoin market.

Tether’s USDT Market Cap Reaches $83.2 Billion Despite Setbacks in Stablecoin Market

Tether reported USDT’s market cap reached $83.2 billion earlier this week. Terra’s blockchain project collapsed in May 2022, causing an $18 billion loss.

Tether’s achievement is notable despite a declining stablecoin market for 14 months. Blockchain-based financial systems rely on stablecoins, a subset of cryptocurrencies valued at $129 billion. Trades are facilitated between fiat currencies and digital assets.

Due to its closest competitors’ problems, USDT, a stablecoin, has gained much traction. Silicon Valley Bank’s collapse in March affected Circle’s second-largest stablecoin, USDC.

The USDC token continues to be affected by this, along with price stability issues. Binance USD (BUSD), a stablecoin with a previous value of $20 billion, also suffered a setback when New York state regulators forced its issuer to stop minting new tokens in February.

Tether Faces Criticism Over Transparency Issues as Stablecoin Holders Seek Security

In the past, Tether has been criticized for not being transparent about its reserve assets, including the risky loans it makes to undisclosed borrowers. Tether had to provide documents about USDT’s backing in response to a lawsuit alleging it manipulated Bitcoin’s price using newly created tokens.

Additionally, The Wall Street Journal reported that the company used falsified documents to get bank accounts in the past.

In these uncertain times, stablecoin holders have gravitated towards USDT, seeing it as a secure option because U.S. banks or regulators do not regulate it. USDT’s market share is at its highest level in at least 22 months because of this increase in confidence.

“Tether’s rise suggests peg stability is far more important for most stablecoin holders than issuer transparency,” Kaiko analyst Conor Ryder notes in a report.

Kaiko raised concerns about USDT’s market cap surge, which didn’t match the substantial decline in trading volumes, which reached multi-year lows. Market caps of other stablecoins tend to correlate with trading volumes.

The discrepancy is caused by the increasing use of USDT for payments, particularly in developing countries, according to Paolo Ardoino, Tether’s chief technology officer. Approximately 40% of token activity now comes from this shift.

USDT allows transactions to be completed quickly and easily with minimal fees, and it is often used instead of traditional fiat currency because of its convenience and relative stability. This has made it increasingly popular, particularly in countries with less developed traditional banking infrastructure.

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