- Stablecoin TrueUSD lost its $1 peg due to massive outflows on Binance, highlighting market uncertainties and potential technical hiccups.
- A recent report from Circle revealed a 59% increase in USDC holders despite a supply decline, indicating a growing adoption.
- The CEO of Circle predicts that US regulation for stablecoins may happen in 2024, potentially driven by recent bills passed in Congress
The crypto market is going through a wave of uncertainty at the time of writing, and the stablecoin market is no exception.
Everything from the depeg of a Justin Sun-linked stablecoin due to massive outflows, to a recent report that claims that USDT’s dominance is about to be challenged, has happened over the last three days.
Here are some of the biggest stablecoin stories in web3 as of this week.
TrueUSD (TUSD) Stablecoin Loses Peg Due To Massive Outflows
According to CoinMarketCap data, on January 15, TUSD fell to as low as $0.984 on certain exchanges, losing its $1 peg.
Keep in mind that Stablecoin depegs happen quite frequently in the crypto market, with the most popular instances being Terra’s USTC and Circle’s USDC between 2022 and 2023.
However, TUSD’s depeg came as a shock to the market, because it came almost completely as a surprise.
Interestingly, this depeg of TUSD came aid reports of customers selling massive amounts of the stablecoin on Binance.
According to reports, traders were actually swapping all of their TUSD for USDT at an alarming rate. So much so, that over $340 million worth of TUSD was sold in the past day, compared to only $296.8 million worth of buys.
According to Protos, TUSD’s APIs hit a technical difficulty, causing a panic that forced investors to sell their holdings.
USDC HODLer Base Increased By 59% Last Year, Despite Circulating Supply Plunge
In spite of a drop in its market cap and circulating supply, USDC has had a notable increase in its user base in 2023, according to a new report from Circle.
Circle’s report states that the circulating supply of USDC decreased by around 44%, from $45 billion at the end of 2022, to $25 billion at the end of November 2023.
Circle also points out that in 2023, USDC continued to demonstrate resilience and adoption despite the decline in its supply.
However, according to the report, there were over 2.7 million wallets with at least $10 worth of USDC by the end of 2023, a 59% increase from the previous year. This shows that despite the drop in its market value, more investors flocked towards the stablecoins, applying it to more use cases.
The report also concludes that USDC is bound to witness a lot more events in 2024, including the coming Circle IPO, USDC’s expansion in Africa, as well as a lasting response to regulatory changes.
Massive Stablecoin Regulation Might Be Incoming Very Soon, Circle CEO Jeremy Allaire Says
Jeremy Allaire, the CEO of Circle, shared his opinions with CNBC during the World Economic Forum’s annual conference on January 15 in Davos, Switzerland.
Allaire says that since other countries are already regulating stablecoins, the United States should consider taking the lead.
Citing advancements by legislators, the courts, and regulators, he added that the stablecoin policy is gaining steam and bipartisan support in the United States.
“I think there’s momentum. I think there’s a very good chance of seeing this pass into law this year,”
In the last year, two significant stablecoin bills have been presented in Congress.
For example, Representative Patrick McHenry of the United States is sponsoring the Clarity for Payment Stablecoins Act, which would permit stablecoin issuers to function the same way as federally licensed banks.
Another is Senator Bill Hagerty’s Stablecoin Transparency Act, in which stablecoin issuers would have to provide regulators and the general public with information on their reserves, audits, risk management, and compliance procedures.
So far, Circle and other industry participants have backed both bills, arguing that stablecoins require uniform and transparent regulations in order to stay relevant and serve customers better.
Overall, stablecoin regulation in the US may be the most effective way to prevent both accidental and deliberate depeggings like we have seen with USDC and USTC respectively.
This might serve to protect investors from losing billions of dollars due to human and calculation errors.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.