Tether (USDT) has profited from the current debacles in the crypto space to bolster its lead as the largest stablecoin.
According to the latest CoinMarketCap data, the Tether market cap has risen to $77.6 billion. Helped by inflows of almost $5 billion within the past weeks, it is now twice that of its main rival, the USD coin, whose value plummeted to $35.3 billion.
As a result, BUSD, the stablecoin backed by the Binance exchange, rounds up the top three largest stablecoins with a market cap of $8.1 billion at the time of this writing.
Recently, USDC lost its $1 peg due to Circle — the company that issues it — having reserves of $3.3 billion at Silicon Valley Bank, which collapsed. This directly impacted the $1 peg of another stablecoin, DAI as it uses USDC as its liquidity source.
To their credit, USDT wasn't affected by this or Silvergate's collapse either, and their CTO, Paulo Ardonio, was quick to say on Twitter, "Tether doesn't have any exposure to Signature Bank."
USDC dropped to as low as $0.88. Although it returned to $1, thanks to intervention from the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the U.S. Department of the Treasury, the damage was already done.
Several investors flocked to alternative stablecoins after this disaster — and are reportedly yet to return — with USDT being a significant beneficiary of this drama.
After the incident, USDT's market cap increased from $71.9 billion to $75 billion within a short while. Although it has since changed from then, the immediate impact was evident, as shown in the gain.
About a month ago, BUSD was caught in the United States Securities and Exchange Commission (SEC) crossfire. The SEC alleged that the Binance stablecoin, BUSD, was an unregistered security — a prolonged claim.
Shortly after, the New York Department of Financial Services (NYDFS) ordered Paxos Trust, the stablecoin's operator, to stop minting the coin.
Paxos was further accused of violating investor protection laws and would reportedly be sued. Although unsurprisingly, they ended their partnership with the crypto exchange, their CEO Charles Cascarilla noted,
The market has evolved, and the Binance relationship no longer aligns with our current strategic priorities.
This incident led to BUSD dropping by almost 50% as it plunged from $16 billion to just over $8 billion. Chanpeng Zhao, the Binance founder, tweeted about this, admitting,
We do foresee users migrating to other stablecoins over time."
In all of these, Tether could be the biggest winner.
Data from Glassnode shows that Tether currently commands 58% of the stablecoin market — its highest since September 2021. It is helped in no small measure by USDC, BUSD and DAI all faltering recently.
Nonetheless, crypto investors and enthusiasts alike remain skeptical about USDT. There are concerns that Tether might face the same ordeal its counterparts have faced.
However, Paolo Ardonio, the firm's CEO, said in that regard,
Tether has been stress-tested multiple times and passed with flying colors. Tether leads the industry in both transparency and security."
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