Tether-issued USDT (USDT) stablecoin broke past a new all-time-high market cap of over $83 billion as it continues its stablecoin market dominance.
The new ATH market cap for the USDT stablecoin comes in a year when other stablecoin issuers are struggling to remain afloat due to regulatory ire. The same was pointed out by cryptocurrency exchange Binance’s CEO Changpang Zhao aka CZ.
Tether USDT market cap chart. Source: Coinmarketcap
CZ in a quote tweet drew attention towards BUSD, a Binance stablecoin issued by Paxos. The Binance CEO said that “BUSD was a fully regulated stablecoin that was ‘capped’ by NYDFS at a $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 earlier this year, the New York Department of Financial Services (NYDFS) ordered Paxos to stop any new issuance of BUSD citing violations of security laws.
At a time when USDT has reached its ATH market cap, its competitors such as Circle-issued USD Coin (USDC) or Binance’s BUSD are struggling to maintain their market dominance. USDC the second largest stablecoin’s market cap stands at $28.8 billion with a difference of over $50 billion. For context, at one point UDC’s market dominance was nearing that of USDT and its market cap reached an ATH of $55.8 billion in June 2022.
USDC all time market cap chart. Source: Coinmarketcap
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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