Tether Dominates Stablecoin Market Amidst Regulatory Pressure
Tether’s USDT has emerged as the global leader in the stablecoin race, thanks to US regulators pushing it overseas. As the United States increases pressure on crypto companies, the rest of the world has chosen Tether as its preferred dollar-pegged stablecoin for transactions.
Heavyweight Battle: Tether vs Circle
Since mid-2022, there has been a growing divergence between Tether’s USDT and Circle’s USDC, the top two stablecoins. Initially, the circulating supplies of these stablecoins had a $10 billion difference. However, that gap has now widened to over $65 billion.
Tether’s market capitalization has reached a record $90 billion, while Circle’s has decreased to just over $24 billion. Tether currently holds almost 70% of the stablecoin market share, while Circle’s share has shrunk to only 18%.
USDT Serves Global Transaction Needs
According to Rob Hadick from Dragonfly, USDT volumes are nine times higher than USDC volumes, indicating different use cases for these stablecoins. Traders outside regulated firms and retail customers in emerging markets primarily use USDT for transactions.
In contrast, USDC is mainly used by US-based firms for value preservation and as a safe haven asset. This makes Tether a more widely used stablecoin for dollar liquidity across the world.
Stablecoin Ecosystem Outlook
The leading stablecoins, USDT and USDC, command a combined market share of 88%, leaving little room for alternatives. Binance USD (BUSD), once a competitor, now only holds 1.2% of the market due to regulatory pressure.
The decentralized stablecoin DAI holds the third position with a circulation of 5.3 billion and a market share of 4%. True USD (TUSD) ranks fourth with 2.8 billion in circulation, representing just over 2% of the market.
Hot Take: Tether’s Global Dominance Amidst Regulatory Pressure
Tether has established its dominance in the stablecoin market due to US regulators pushing it overseas. As the United States tightens its grip on crypto companies, those that shift their focus abroad will emerge as winners. However, this regulatory pressure may ultimately be detrimental to the United States itself.
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