- Tether’s USDT has grown its market cap to over $83 billion.
- Competition from the likes of Terra USD and USD Coin has risen.
- Regulatory scrutiny about Tether and other stablecoins remains.
The Tether token has continued to see robust growth even as competition in the stablecoin industry rises. It has done well even as bets against the coin from moneyed Wall Street elites remain concerned about the coin. Its market capitalization has risen to an all-time high of over $83 billion.
Tether regulatory challenges
Tether has been a controversial stablecoin for years. For one, there have been concerns about the funds that back the coin for years. For example, its transparency reports show that most of the cash that back the coin has been held in commercial paper and bonds.
To a large extent, these allocations make sense because they are often viewed as safe assets. As such, instead of storing the funds in a bank account, it makes sense for the developers to earn a small return on these funds.
Three weeks ago, it was reported that many short-sellers had placed wagers that Tether will crash soon. They include Fir Tree Partners and Vicerotu Research. They have arranged the short trades with Genesis Global Trading, a leading crypto brokerage. In a note, a spokesperson said:
“Tether has been stress tested time and time again and passed with flying colors. During such events, its peg remained solid, all redemptions were honored and even the price on exchanges remained stable.”
At the same time, other key players in the financial sector such as regulators have continued focusing on Tether. Regulators believe that the coin poses substantial risks in the financial sector.
Stablecoin competition rising
Tether has a pole position in the stablecoin industry, where it dominates because of its stability. However, the platform is seeing strong competition. For example, Circle’s USD Coin has grown its total market cap to more than $49.2 billion.
The company raised over $400 million from Blackrock and Fidelity last week. In addition to the funding, Blackrock said that it was exploring deepening the relationship.
Terra’s UST stablecoin has also seen spectacular growth, with its market cap soaring to over $18 billion. As a result, it has passed Binance USD, whose market value stands at $17.52 billion. Further, Near Protocol and Tether have announced plans to launch their stablecoins.
Therefore, there is a likelihood that Tether will continue doing well even as competition rises. Besides, it maintains a strong market share in the stablecoin industry. It is useful because it enables people to buy cryptocurrenciesin the DeFi industry.
