As a long-term crypto investor with a keen interest in stablecoins, I’ve witnessed the dynamic evolution of this market firsthand. The decline in Tether’s (USDT) market dominance from 82% to 74% on centralized exchanges (CEXs) this year is an intriguing development that underscores both growing competition and potential regulatory challenges for USDT.
The proportion of trading volume for Tether’s USDT stablecoin on centralized exchanges (CEXs) has dropped from 82% to 74% as of now in 2023.
The decreasing market supremacy of Tether signifies an increasing level of competition among stablecoins, as well as potential regulatory hurdles that this digital currency may encounter.
EU regulations and new competitors
As a researcher studying the cryptocurrency market, I’ve observed that despite a decrease in market share, Tether (USDT) continues to hold the position as the most extensively used stablecoin. With a market capitalization surpassing $100 billion, USDT’s appeal is rooted in its ability to offer a dependable, fiat-collateralized digital currency that enables hassle-free transactions and trading activities throughout the cryptocurrency sector.
According to the Kaiko Analytics report, Tether’s decreasing market share might be linked to the impending European Union regulations, specifically MiCA, which could significantly affect stablecoins such as USDT when implemented.
The European Union’s MiCA regulation may prohibit the purchase of stablecoins by EU investors, causing platforms like Kraken to reconsider their backing of USDT for their users.
The CEO of Tether, Paolo Ardoino, has voiced apprehensions regarding certain elements of MiCA’s regulations. He mentioned that Tether presently has no intention of complying with these new rules within the upcoming period.
The regulatory instability might cause Tether to lose more market share as exchanges and users opt for other stablecoins that conform to the evolving regulatory guidelines.
Based on the findings in the report, the market for stablecoins is becoming more varied as popular options like Circle’s USDC are gaining popularity.
Tether to suspend USDT redemptions
As a researcher studying the digital currency market, I came across an announcement made by Tether on July 11th. In this communication, Tether revealed their intention to temporarily halt redemptions of USDT (Tether Dollars) on several blockchain networks. This measure was taken with the primary goal of maintaining the long-term stability and sustainability of the USDT ecosystem.
Over the next few months, Tether will progressively discontinue its assistance for USDT on various networks. Detailed schedules for each network will be released individually to ensure a seamless experience for users during this transition.
Tether is making a tactical decision to simplify its operations by ceasing USDT redemptions on underutilized blockchain networks. This action is intended to enhance the general user experience and preserve the reliability of the USDT stablecoin’s peg to the US dollar.
DWS, a prominent European investment company, is setting up a new entity for the creation of Germany’s inaugural cryptocurrency under national oversight. The objective is to develop a stablecoin pegged to the euro and in accordance with BaFin, Germany’s financial regulatory authority, by the year 2025.
Additionally, Justin Sun, the mastermind behind Tron (TRX), has announced intentions to launch a fee-free stablecoin. If executed effectively, this innovation could significantly transform the stablecoin sector.
The market for stablecoins is constantly advancing, with notable inputs from corporations such as Coinbase and Circle. For Coinbase, the generation of income from stablecoins is crucial, whileCircle’s recent European approval signifies a pivotal moment towards becoming a leading global player in this sector.
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2024-07-13 19:00