Tether USDT market cap breaks ATH, Binance CEO hints at regulatory cap

The Tether (USDT) stablecoin has hit a new all-time-high (ATH) market capitalization of over $83 billion as its market dominance continues.

The new ATH market cap for USDT comes in a year when other stablecoin issuers struggle to stay afloat due to regulatory woes. The same was stated by Changpeng “CZ” Zhao, CEO of cryptocurrency exchange Binance.

In a tweet, CZ drew attention to Binance USD (BUSD), a Binance-branded stablecoin issued by Paxos. Binance CEO said that BUSD, a fully regulated stablecoin, was “capped” at $23 billion by the New York Department of Financial Services (NYDFS) and currently sits at a $5 billion market cap, and since then, USDT has made tremendous gains. growth is seen.

BUSD, a fully regulated stablecoin, was “capped” (no new mintage) by NYDFS at $23b. Now at $5b market cap.

Since then, USDT has seen tremendous growth. https://t.co/KqBkDK71WS

— CZ Binance (@cz_binance) June 1, 2023

In February, the NYDFS ordered Paxos to stop any new issuance of BUSD, citing violations of security laws.

At a time when USDT has reached its ATH market cap, its competitors, such as Circle-issued USD Coin (USDC) and BUSD, are struggling to maintain their market share. The second largest stablecoin, USDC has a market cap of $28.8 billion, a difference of over $50 billion from USDT. For context, at one point, USDC’s market dominance was close to that of USDT, with its market capitalization reaching an ATH of $55.8 billion in June 2022.

The prolonged 2022 bear market took its toll on both the stablecoins with their market caps declining after the June 2022 highs. However, USDT has managed to bounce back with high market dominance, while USDC’s market cap has nearly halved.

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The major reason for the decline in market share of other stablecoins can be attributed to regulatory scrutiny by United States regulators and the US banking crisis. Following the ban on new minting of BUSD for security breaches, its market cap declined rapidly as users began to convert their BUSD into other stablecoins.

Similarly, for USDC, a bigger crisis came from the collapse of Silicon Valley Bank, where the stablecoin issuer had about $3.3 billion in reserves. This stirred the market and subsequently led to a fall from the US dollar. Although USDC regained its peg the next day, taking a significant toll on its market cap, many users converted their USDC into other stablecoins fearing a total crash.

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