Stablecoin Supply Normalizes as Tether Dominance Grows Amid Regulatory Concerns
The supply of USDC stablecoin on Ethereum is stabilizing after a wave of redemptions in the wake of its links to Silicon Valley Bank. However, USDC has ceded further ground to its larger rival, Tether, which now accounts for almost 43% of the total Ethereum stablecoin supply. The amount of USDC in circulation now stands at just under 31 billion, which is 11 billion less than at the beginning of the year. Last month, the second-largest stablecoin lost its 1:1 peg to the U.S. dollar when Silicon Valley Bank shuttered, causing panic among investors. While USDC eventually regained its peg with federal regulatory guarantees, redemptions continued steadily.
Binance USD and Gemini Dollar Supplies Also Decline
Other stablecoins on Ethereum have also dwindled since the beginning of the year, notably Binance USD and Gemini dollar. Binance USD, issued by Paxos in a deal with the world’s largest crypto exchange, has decreased from just over 16.5 billion to just over 7 billion, while GUSD has dropped from roughly 575 million to less than 391 million. Binance’s regulatory concerns may have dented demand for its stablecoin. The Commodities Futures Trading Commission sued the exchange for allegedly violating federal laws, while Binance Australia Derivatives had its license canceled by the country’s regulator. There are also concerns regarding the health of Gemini, which recently loaned $100 million to its firm after an unsuccessful effort to raise outside funds.
Tether is Increasing Its Stablecoin Dominance
The regulatory and financial struggles of USDC’s competitors have only increased demand for Tether, the foremost dollar-pegged stablecoin. After starting the year with a 32% share of the total Ethereum stablecoin supply, USDT now accounts for almost 43%. The supply of tether on Ethereum increased from 32.3 billion to 35.3 billion. In February, Tether issued an attestation report and claimed that its assets exceeded its liabilities, while reporting a net profit of $700 million for the fourth quarter of 2022.
Source: The Block
