In 2023, there was a real turning point for USDT, the stablecoin crypto of Tether on the US dollar, so much so that it was appreciated even by banks.
Crypto news: the turning point of 2023 of the stablecoin Tether among the banks
The key point of this story was the failure of some large USA banks in March 2023.
In fact, in particular, the closure of Silicon Valley Bank (SVB) led to a loss of dollars for Circle, that is, the issuer of the main rival of Tether (USDC).
At that moment, what was commonly considered the safest stablecoin (USDC by Circle) lost its peg with the dollar, although it quickly recovered it when the United States central bank (Fed) intervened to cover all the shortfalls in the deposits of the failed banks.
USDT di Tether, che comunque già allora dominava i mercati crypto, invece non perse nulla.
At that moment many stopped using USDC and started using USDT.
The trend over time
Taking into consideration the market capitalization of USDT and USDC, before the implosion of the Terra/Luna crypto ecosystem in May 2022, Tether’s stablecoin was worth 83 billion dollars, while Circle’s was about 50 billion dollars.
At that moment USDT had a capitalization 66% higher than USDC.
The implosion of Terra/Luna, however, was due to the depegging of their algorithmic stablecoin, UST, from the price of the US dollar, and this generated a lot of fear among the holders of USDT.
But, despite a 20% drop in market capitalization over three months, Tether’s stablecoin did not lose its peg with the dollar, and thus it was able to grow again.
At that moment USDT had dropped to 66 billion dollars, while USDC had risen to 55, reducing the gap from 66% to 20%.
Since then, however, the capitalization of USDC began a strong and lasting decline, while USDT instead stopped falling.
The 2023
At the beginning of 2023 USDT was still at 67 billion dollars, but USDC had dropped to 44 billion.
With the closure of Silicon Valley Bank in March 2023, the market capitalization of USDC plummeted due to the depeg with the dollar, although only temporary, and the flight towards other stablecoins.
This collapse stopped only in November of the same year, when it had already fallen to 24 billion dollars. It is worth noting that compared to the peak of 55 billion in July 2022, the loss was 56%.
In January 2023, however, the crypto market had started to recover, so when the flight from USDC occurred in March, many simply turned to USDT, also because Tether’s stablecoin had not lost its peg with the dollar.
Thus, the market capitalization of USDT rose to 84 billion dollars, returning to the highs of the previous year.
2024 for stablecoins
Starting from November of last year, a true bull run began in the crypto markets, which concluded only in March of this year.
At that point, both the market capitalization of USDT and that of USDC grew.
While Circle’s stablecoin has merely returned above 30 billion dollars, USDT’s has even jumped above 110 over the course of the rest of the year.
At this moment the gap between the market capitalizations of the first and the second largest stablecoin in the world has skyrocketed to +245%.
The current dominance of USDT in the stablecoin market is even 70%, which is more than double all the other stablecoins combined.
The banks become more crypto by approaching Tether’s stablecoin (USDT)
From the peak of 2022 to today, the market capitalization of Tether’s stablecoin has grown by 37%, while that of USDC has fallen by 38%.
Although the growth of USDT is probably mainly due to the growth of the crypto markets, in conjunction with the decline of USDC, traditional financial institutions may also have played a certain role.
The fact is that to operate directly on the crypto market, it is not convenient to use fiat currency, but stablecoin. This also applies to traditional financial institutions, so even TradFi companies that choose to operate in the crypto markets inevitably end up encountering stablecoin.
With a dominance of 70%, it is absolutely inevitable that even traditional companies that want to operate in the crypto markets will end up using USDT. Moreover, over time it has also provided greater guarantees of stability, compared to other stablecoins that seemed safer but were not really so.
The European regulation MiCA
A turning point, however, could occur in the countries of the European Union with the introduction of the new crypto regulation (MiCA).
In fact, the MiCA introduces the recognition of stablecoin as e-money token, effectively requiring exchanges to remove those that do not obtain such recognition.
Although the new regulation on stablecoin has already come into force in the EU, from June 30, exchanges have 60 days to comply.
So the current situation is not yet definitive, and it will take about another month before having certain information.
At the current state, USDC in the EU has obtained recognition as an e-money token, while USDT has not yet. Despite this, Tether’s stablecoin has not yet been delisted from crypto exchanges in Europe precisely because there is still a month to comply.
It is important to emphasize that this is a situation limited exclusively to EU countries, and the possible solutions seem to be only two.
Either by the end of August, USDT obtains recognition from the EU as an e-money token, as already done by USDC, or it will have to be made no longer available on exchanges to users residing in an EU country.
In the event that it does not obtain such recognition, USDT could be replaced by aUSDT, that is, Tether’s stablecoin pegged to the US dollar, but collateralized in gold and not in dollars. At this moment, however, the probabilities seem to lean more towards the hypothesis that in the end USDT will manage to obtain recognition as an e-money token in the EU.