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Tether [USDT] CTO Paolo Ardoino says “everyone takes from king” on competitor’s rising market cap

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Tether, the issuer of the stablecoin USDT, has been constantly under regulator’s scrutiny. Over the past couple of months, USDT appears to be shrinking while its competitor USDC advances at a rapid pace. But this exec is not worried.

Paolo Ardoino, who happens to be the CTO of both Bitfinex and Tether, iterated the famous adage “Let everyone grow so that the sum of all voices will be louder,” and asserted that the “stablecoin industry is much more solid [with competitions] around in the long run.”

Taking a jibe at the recent reports regarding USDC “eating away USDT’s market share,” Ardoino clarified that does not mind seeing growth and that he welcomes everyone provided there is a level playing field. His tweet read,

“Everyone at Tether is proud that the idea that they created in 2014 is now copied by many parties. Ain’t good if no one bothers. So we are flattered. Alone is harder to make history. With a bigger representation of stablecoins, we can aim for fairer regulations.”

USDT’s decline in dominance

The dwindling price of the cryptocurrency market has had no effect on the transaction volume of stablecoins. In fact, the figures have stayed widely unfazed. As per Messari’s latest report, stablecoins witnessed impressive growth in the second quarter of this year amidst market-wide sideways movement. In addition to that, stablecoins have reportedly facilitated a staggering $1.7 trillion in transaction volume, meaning a rise of 1,090% year-over-year and 59% since the previous quarter.

USDT, on the other hand, had failed to impress the charts, as the parabolic growth in the market cap of the world’s oldest and largest stablecoin giant came to an abrupt halt in May.

For almost two months, Tether has not issued a single USDT on the Ethereum network. This has been one of the major factors that have affected the asset losing its market dominance. Additionally, China’s renewed crypto crackdown on USDT is another contributor in addition to the mounting regulatory threats.

Tether Community Unveils non-profit Initiative – Tether Impact

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The stablecoin realm and Tether have been under regulatory scrutiny for a long time. But this has not deterred the community members from launching an initiative in a bid to boost USDT’s use cases across the world. Dubbed ‘Tether Impact,’ the new brand-new organization that will be run by the community and will be a non-Profit, independent organization.

Tether Impact will essentially interact with the world’s largest stablecoin issuer Tether and the crypto ecosystem for the purpose of supporting and incentivizing the use of USDT in third world countries, emerging economies as well across the decentralized finance DApps. This was revealed by a community member, Daniele McDonald. As of now the official website for the initiative consists of just two paragraphs, one of which described its goal as,

“Tether Impact aims to be the bridging point between USDT and its users, raising awareness and educating the general Cryptocurrency Community on any ongoing Tether initiative.”

Growing Tether conundrum

While stablecoin, in general, has been a controversial subject among global lawmakers, USDT, particularly, has been firmly in the regulatory crosshairs. Among those raising an alarm about the potential risks of the world’s third-biggest cryptocurrency, Boston Fed President Eric Rosengren’s comment has stood out. In June, Rosengren not just listed USDT among the “financial stability challenges” the US central bank is eyeing, but also called it “new disruptors” to short-term credit markets. This was also one of the rare moments when an executive in the Feds explicitly cited USDT in a speech.

Currently, there is more than $60 billion worth of USDT in circulation which makes USDT deposits exceed that of many US banks.

Since the beginning, Tether has not been a transparent product, unlike its peers. This changed after the long battle with the New York attorney general [NYAG]. To conform with the settlement terms, the stablecoin has now started publishing the public with quarterly breakdowns of the investments used to back the stablecoins.

USDC on Tron Blockchain Hits $111 Million 4 days after expansion

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USDC activity on the Tron [TRX] blockchain has hit a milestone already. As per the latest stats on Tronscan, the world’s second-largest stablecoin’s circulating supply reached $111.68 million on the 4th of July.

This news comes just four days after CENTRE, the consortium run by cryptocurrency exchange Coinbase and payments firm Circle, announced that USDC will be implemented on Tron, Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, and Tezos. Circle CEO, Jeremy Allaire had earlier noted,

“TRON has built a very large and highly successful blockchain platform and network, and is one of the most widely used in stablecoin transactions. We’re excited to bring the benefits of a trusted dollar digital currency such as USDC to this growing ecosystem of users and developers.”

Growing Tron’s appeal and USDC’s dominance

It is important to note that USDC has experienced unprecedented activity over the last few quarters. Reports have also gone on to state that it could soon become a dominant stablecoin on the Ethereum network. It has emerged as one of the most preferred stablecoin in the decentralized finance [DeFi] sector. To top that, over 50% of USDC supply currently rests in smart contracts which totals up to almost 12.5 billion. Additionally, Tether’s growing legal woes also deviated users from turning to USDC, which could be attributed to the leading stablecoin slowly losing grip.

Meanwhile, this new achievement on the TRX blockchain could also signify that the market players are increasingly seeking other blockchains that facilitate transactions at a much cheaper and significantly faster pace than Ethereum. Besides, the TRX blockchain has already seen rapid growth for USDT, on its network. As a matter of fact, USDT on Justin Sun’s blockchain has recently surpassed that on Ethereum.

In short, USDC’s growing dominance in the market has coincided with Tron’s growing appeal as a critical alternative to the Ethereum network.

Stablecoin issuer Tether releases breakdown of its reserves

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The stablecoin issuer Tether released a report consisting of a breakdown of its reserves as of 31st of March 2021. This is the first of its kind since Tether’s launch in July 2014.

The pie chart below shows that the company held approximately 76% of its reserves in cash and cash equivalents and other short-term deposits and commercial paper.

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Stablecoin issuer Tether releases breakdown of its reserves 2

With a share of 65.39%, commercial paper formed the major chunk of the stablecoin giant’s cash and cash equivalents cohort. Fiduciary deposits, on the other hand, accounted for 24.20% of the same category, while cash, reverse repo notes, treasury bills comprised 3.87%, 3.60%, and2.94% respectively.

The remainder of the platform’s reserves were split up across three groups. For instance, secured loans [none to affiliated entities] formed 12.55% of the total reserves while corporate bonds, funds, and precious metals collectively represented 10%. Moreover, other investments, including digital tokens, constituted 1.64%.

Reason Behind Tether’s First-ever Reserve Composition Release

The latest report essentially underscores the company’s efforts to remain in compliance with a settlement with the New York Attorney General [NYAG] whose probe ended in March. Tether and its sister company/cryptocurrency exchange Bitfinex had to pay an $18.5 million fine in addition to agreeing on the release of quarterly breakdowns of its reserves. In line with this, Tether stated,

“Today’s publication reflects our continued dedication to making this information public as part of our ongoing commitment to transparency and setting the standard in our industry. We embrace that commitment to our community.”

Earlier this month, its stablecoin [USDT] on-chain’s volume had climbed to a new milestone of a whopping $1 trillion for the first time ever. Despite several controversies and the emergence of several stablecoins over the past few years, Tether continued to dominate the realm. At the time of writing controls well over 60% of the market share of the total stablecoin transaction volume.

Tether Discloses Alleged Extortion Attempt; Calls Circulating Documents ‘Bogus’

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Just when Tether’s long-standing legal drama finally found a resolution, the company was hit by an alleged extortion attempt. In the latest development, the issuer of the world’s largest stablecoin USDT, claims to have received a ransom note asking for 500 BTC that currently worth about $22 million.

If the company fails to pay the amount, the entities said that they will leak documents to the public in an effort to “harm the bitcoin ecosystem.”

Tether claims that the documents circulating online purporting to be between the company personnel and reps of Deltec Bank & Trust and others bogus.

The documents in question revived the age-old debate of USDT’s backing. It alleged that the stablecoin is, in fact, backed by crypto and not US Dollar.

In a clarification thread, Tether stated that it is unclear whether the latest stunt is a basic extortion scheme like those aimed at other crypto-based firms or individuals seeking to “undermine” the stablecoin issuer and the community as a whole.

It added,

“Either way, those seeking to harm Tether are getting increasingly desperate.”

Calling it a “sad attempt at a shakedown”, Tether went on to say that the platform nevertheless takes these threats “seriously”. It also stated,

“We have reported the forged communications and the associated ransom demand to law enforcement. As always, we will fully support law enforcement in an investigation of this extortion scheme.”

Tether’s meteoric rise

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Tether Discloses Alleged Extortion Attempt; Calls Circulating Documents 'Bogus' 4

The stablecoin has been one of the controversial tokens to exist. Despite this, it serves a crucial role in the crypto market. It is no surprise that trading has become the major source of demand for USDT.

Over the past year, the stablecoin saw an astonishing rise in tandem to Bitcoin crossing several key hurdles and finally breaching $55K.

With over $35 billion in circulation, Tether is now the fifth-largest token by market cap on the cryptocurrency ladder.

TRC-20 Tether [USDT] Circulation On Tron Exceeds $12.4 Billion

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More than $12.4 billion in the stablecoin Tether [USDT] has been issued on the Tron [TRX] blockchain as revealed by the foundation’s CEO Justin Sun.

This development comes three weeks after the project founder had revealed a milestone of $9.3 Billion USDT issued on Tron which was achieved after 644 days. The number of USDT issued on the blockchain has increased significantly since the first-ever 10 USDT was issued all the way back on the 17th of April, 2019.

The world’s largest stablecoin is also issued on a myriad of chains including Bitcoin Cash, EOS, Liquid, Solana, and Algorand.

And for the longest time, a great majority of Tether were minted using Ethereum’s ERC20 standard. However, the minted stablecoin using the TRC20 standard has seen a much larger transaction count in 2021.

Tron has rapidly emerged as the fastest-growing blockchain for USDT issuance.

Coin Metrics
TRC-20 Tether [USDT] Circulation On Tron Exceeds $12.4 Billion 6

TRC20-based USDT has seen a higher transaction count than ERC20-based USDT tokens every day this year. According to the latest chart compiled by Coin Metrics, it was found that Tron captured more transactions than both Ethereum and Bitcoin combined.

In a recent edition, Coin Metrics’ ‘State of Network’ report had revealed,

“Tether activity has increasingly shifted over to the Tron version of the stablecoin. Since the beginning of 2021, the amount of USDT_TRX active addresses has eclipsed the number USDT_ETH active addresses.”

Why Has Tron Been Successful In Attracting More Users?

The shift in this sentiment is undoubtedly the massive transaction fee in the Ethereum network that has resulted in users looking for affordable alternatives. In the case of Ethereum, the transaction fees have risen due to rising demand stemming from the flourishing decentralized finance [DeFi], while Tron fees, on the other hand, have remained minuscule.

Hence, the TRX network has managed to attract the issuance of not just teh most popular and widely used stablecoin but also other digital assets on its blockchain. The blockchain now hosts TRC-BTC, TRC-ETH, WBTC, WETH, WLTC, and TRC-AMPL.

Moreover, Sun had also hinted that more ‘wrapped’ digital assets will be issued on the network.

Here’s How Tether Inflows Played Crucial Role in Identifying Bitcoin’s Dip Buy Opportunities

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Bitcoin’s price was still struggling to hold its fort above $32,000. The world’s premier cryptocurrency saw erratic behavior over the past month as it fluctuated far from its recently established all-time high. At times like these, the dynamic between top stablecoins’ exchange data and Bitcoin’s short-term price movement reveals crucial data points.

The crypto-analytic platform, Santiment shared a pretty interesting take on the same. It found that since the beginning of the year, the amount of ERC-20 Tether moving to known exchange wallets has spiked on three separate occasions. The inflow of the top stablecoin intensified around each correction that Bitcoin underwent. This suggested potential dip-buying efforts by market speculators.

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Here's How Tether Inflows Played Crucial Role in Identifying Bitcoin's Dip Buy Opportunities 10

More specifically, over 2 billion USDT entered exchange wallets during the major price dip between January 4th-5th. An additional 3.6 billion USDT inflow to exchanges was recorded between January 11th-13th when Bitcoin’s price took a plunge from its ATH to $34.4k.

More recently, between January 21st-22nd, more than 2.4 billion USDT entered exchange wallets according to Santiment’s latest chart.

This does not end there. The platform also revealed that there were several isolated spikes in Tether’s exchange inflow around local BTC bottoms, similar to ones observed on January 15th and January 20th, respectively.

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Here's How Tether Inflows Played Crucial Role in Identifying Bitcoin's Dip Buy Opportunities 11

And Tether is not the only stablecoin. A similar pattern was also seen in exchange inflows of other pegged tokens such as USDC, TrustToken’s TUSD, and DAI which registered a string of upticks around Bitcoin’s recent pullbacks.

Where was this pressure coming from?

The growth of Tether in 2019, and even in 2020 has been far from stupendous. This can significantly be credited to Bitcoin which witnessed its price blast through the roof especially in the first and second weeks of the new year, which in turn, resulted in the minting of more and more stablecoins.

But institutions have found their favorite alternative investment asset and were found to be heavily investing in it. Yes, Tether continues to be the top dog.

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Here's How Tether Inflows Played Crucial Role in Identifying Bitcoin's Dip Buy Opportunities 12

Besides, Santiment also noted the pairing the median transfer value of stablecoins in the past 30 days, plotted against the price of Bitcoin chart with exchange inflow data suggested that the [potential] spikes in buy-side pressure were in fact steered by large stablecoin holders rather than retail-sized investors.

How Does It Matter Bitcoin Now?

If the above charts are to be taken into consideration, the latest spike in stablecoins’ exchange inflow could potentially suggest Bitcoin-related buy pressure which, in turn, could further advance the crypto-asset’s price movement to soar higher.

Having said that, it is impossible to draw a definite conclusion whether the stablecoins entering exchanges were used to buy BTC, altcoins. However, the above charts did paint a picture that institutions were optimistic and were looking for potential buying opportunities.

Bitcoin Aims For $40K Yet Again As Stablecoin Inflow Spikes

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Stablecoin influx into cryptocurrency exchanges has surged as Bitcoin’s price saw a relief rally and approached $40k.

As Bitcoin joined the bullish streak yet again, the run has opened new doors for the stablecoin bunch. The dollar-pegged or asset-backed-tokens have gained much wider adoption in recent times as their importance has gained prominence amidst the continued volatility in the market which brought about the need for lower volatility crypto-assets.

According to the crypto analytical platform, Santiment, these pegged crypto-assets have continued to have larger and larger ratios of tokens moving to several cryptocurrency exchanges. Tokens such as USDC, TUSD, and SAI have especially mirrored the proportion of its tokens moved to exchanges as Bitcoin’s price has surged.

santiment

Why now?

If the factors such as individual and institutional interest go, the case for a wider blockchain and crypto-asset adoption and investment is inevitable. Moreover, taking into consideration the growing and expanding ecosystem, the potential market participants and users have strongly sought to gain exposure to this area, at the same time, there is also a push for less volatile, and more sophisticated, crypto investment options which has further helped pegged tokens to surge in market cap.

What Does Stablecoin’s Resurgence Mean For Bitcoin?

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According to data from CryptoQuant, stablecoin deposits was first noted around the 13th of January when Bitcoin’s price saw a noticeable spike after trading in the red zone. Along with it, the cryptocurrency market also showed signs of recovery. Hence, the latest trend was indicative of significant buying pressure for Bitcoin as well as altcoins. This also meant that the investors bought the dip as depicted by the rising stablecoin inflow.

This is evident because traders tend to use stablecoins such as Tether [USDT] or USDC etc., rather than fiat since these are pegged to the value of fiat which makes it tradable across exchanges. The demand for stablecoins has increased magnificently over the past weeks. Leading the pack was USDT with a market cap of more than $24 billion as whales and high-net-worth investors jumped in to stack millions of dollars worth of Bitcoin.

Bitfinex Parent Company, iFinex Receives Another Deadline To Present Documents

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The crypto-verse harbors several legal cases. The Bitfinex/Tether case has been one of the longest and most controversial cases in the industry. The battle between iFinex, the parent company of one of the biggest exchanges in the crypto industry, Bitfinex, and the New York Attorney General [NYAG] seems to be getting nowhere as another extension of a deadline was requested by the parties involved.

Bitfinex and Tether Case Takes A New Turn

iFinex has been in court fighting against the NYAG since April 2019 following an $850 million cover-up of funds. iFinex had been holding back from presenting the documents that were required for the case. However, the latest virtual hearing seemed to have cooled things down as the Office of the New York Attorney General [OAG] penned down a letter to Justice Joel M. Cohen seeking an extension for iFinex to submit the documents before the court.

The Attorney General pointed out that the deadline that was set during the virtual conference that took place on 17 September 2020 wasn’t enough for iFinex to gather the required documents. Hence, a plea to extend the deadline for submission to 15 January 2021 was presented in the letter. The letter was written on 9 December 2020 and the Judge approved the extension on 12 December 2020.

In the previous letters, iFinex was time and again called out for not submitting documents at the assigned time. In a filing, the OAG suggested that it would urge the Court to order the “immediate production of documents and information by Respondents” at the video conference. However, in the latest letter, the NYAG revealed that since the previous meeting [the virtual conference] the parties involved in the case were cooperating especially in the submission of the documents. Additionally, the NYAG affirmed that the parties would present themselves before the court if summoned.

While the case is still in court, the parties involved in the case remain almost unfettered. Tether has been aiding the overall market cap of the crypto industry as it been recording an exponential surge. At the time of writing, the market cap of the largest stablecoin was extremely close to that of XRP’s. With the market cap of XRP at $25.15 billion, Tether’s [USDT] market cap was at $19.7 billion.

Tether Dips by 80% Despite Stablecoins Supply Hitting $20B as USDC Bolsters

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While the cryptocurrency market was on a rollercoaster ride this year, it was the stablecoins that witnessed exponential growth. The market has recently touched the coveted $20 billion mark with respect to the total volume of stablecoins in circulation. Tether [USDT] continued to dominate the charts despite a minor slip and still had a large fraction of supply share, while other stablecoins were starting to make up the ground.CM

This was revealed by the latest edition of Coin Metrics’ State of Network report which further noted that it was the growth of the second-largest stablecoin USDC growth that has been outpacing Tether causing its fall below 80%, a level unseen in the modern era of stablecoins.

Despite the fact that the values of all other stablecoins combined pales in comparison to the supply of USDT, which currently stood at $15.46  the growth of the contenders market cannot be ignored.

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USDC Sets out to Eclipse USDT

The Coinbase-backed stablecoin has recorded massive gains this year. The total supply has topped $2.53 billion and is showing no signs of slowing down. USDC is essentially a centralized dollar-pegged stablecoin which is issued by the Centre Consortium, a collaboration between crypto exchange Coinbase and payment service firm Circle.

The growth was potentially triggered due to the recent explosion in DeFi’s yield farming popularity, in which the liquidity providers are incentivized for staking stablecoins and other digital assets in decentralized protocols for the use of financial activities such as loan issuance, etc.

USDC always had an edge over other stableccoins since it was the first Ethereum-based stablecoin that was launched after Tether in 2018. Furthermore, USDC already issued a supply of over $400 million before its rivals such as Huobi’s HUSD and Binance’s BUSD which were released a year later.

What further spurred the growth was the release of USDC version 2.0 in August this year which added additional security infrastructure to the USDC smart contract. With the association of industry giant such Coinbase, the stablecoin has become increasingly popular among the newcomers as well as experienced traders of the platform. And hence, USDC has managed to establish itself as a go-to asset in the DeFi sector, a major onramp within the ecosystem.