Tether’s stablecoin USDT has regained all of its $20 billion market value, which it lost following the bankruptcy of its algorithmic rival, TerraUSD.
According to the report published by Tether, the circulating supply of the world’s most actively traded digital asset exceeded the previous record of $83.2 billion set in May 2022. The firm’s USDT stablecoin is pegged exactly to the dollar and is protected by backing that value with cash and cash equivalents reserves.
USDT Gains While USDC Shrinks
The recovery of USDT is testament to the dominant role it plays in the crypto industry as a tool to transact and store value.
The stablecoin’s circulation fell nearly 20 percent in the second quarter of last year as the collapse of Terra destabilized the crypto markets, ushering in a period filled with bankruptcies, high-profile scandals and falling prices of most cryptocurrencies. The circulation of USDT has increased in recent months even as its main competitor, USDC, has shrunk and crypto trading volumes have remained generally sluggish.
According to research firm Kaiko, this trend has added to the uncertainty surrounding the dominant stablecoin.
Kaiko said that USDT is used in more than 50 percent of all transactions on centralized exchanges, but Tether’s market share relative to other stablecoins has not increased markedly during the downturn in activity.
In the past, industry watchers have raised questions about whether the USDT is backed by sufficient reserves. The company reached a settlement with the New York Attorney General in 2021 over allegations that client and institutional funds were mixed and lied to investors about their reserves. However, Tether has never admitted to any wrongdoing, along with its sister crypto exchange Bitfinex.
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