The Treasury Department plans to crack down on stablecoin even if Tether’s dominance wears off

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The U.S. Treasury Department is reportedly preparing a review highlighting the challenges posed by the stablecoin withdrawal and the impact of a possible run on the crypto-asset market.

According to a September 16 report by Bloomberg, citing anonymous sources, Treasury officials are preparing policy recommendations to ensure stablecoin holders can freely exchange between their tokens and other assets.

The report said lawmakers hoped to mitigate “the most pressing risks” related to Tether (USDT) and other stable tokens, and also highlighted the threats that a “fire sale” run on crypto assets poses to financial stability at large and large Could mean whole.

Critics have long scrutinized the take-back process and Tether’s support and found them to be inadequate.

After Tether failed to conduct promised audits for years, Tether recently released attestation reports claiming the stablecoin is backed by $ 62.6 billion in assets – 49% of which are commercial paper, while cash and bank deposits are only Make up 10%.

While finance officials are reportedly the most concerned about Tether, USDT’s once hegemonic status over stablecoin markets is waning – the token’s relative market share has declined 25% since early 2021.

After accounting for around 76% of stablecoin capitalization at the start of the year, Tether’s dominance over the sector has fallen by a quarter, according to CoinGecko, and now accounts for 56.5% of the combined stable token market capitalization.

This year, USD Coin (USDC) and Binance USD have captured significant market share in the face of Tether’s decline, with USDC and BUSD rising from 13.7% and 3.40% respectively of stablecoin capitalization to 23.9% and 10 respectively today, 4% grew.

Related: Does Evergrande’s $ 300 billion debt crisis pose a systemic risk to the crypto industry?

Decentralized stable tokens have also shown remarkable growth in 2021, with TerraUSD rising from 0.65% to 2.11% while MakerDAO’s DAI rose from 4.23% to 5.13%.

CoinGecko data also points to a decline in Paxos Dollar’s market share, which has shrunk from 1.15% to 0.85%. However, for every stablecoin tracked by CoinGecko, the total market cap increased in 2021.