Tether Holdings Ltd.'s USDT token has recently achieved a major milestone, surpassing $100 billion in circulation. This marks a historic moment for the world's largest stablecoin, which aims to maintain a one-to-one value with the US dollar.
The surge in circulation comes amidst a booming Bitcoin market, with the cryptocurrency trading at its highest value in over two years.
Tether's Stablecoin Surge
The rise in USDT circulation has been notable, increasing by over 9% since the beginning of the year, according to data from CoinGecko. This surge is attributed to the growing demand for Bitcoin and the stability provided by Tether's stablecoin. Tether's reserves for its USDT stablecoin grew to $97 billion in December, with a significant portion invested in short-dated US Treasury bills.
Tether's dominance in the stablecoin market is evident, with its market share far surpassing its competitors. Currently, Tether makes up around 70% of the $142 billion stablecoin sector, while its closest competitor, Circle's USDC, sits at 19.4%. This underscores Tether's influence in the cryptocurrency space, powering crypto companies and retail investors' activities.
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Tether: Scrutiny and Controversies
Despite its success, Tether has faced scrutiny and controversy over its transparency and corporate structure. Allegations of lying about its collateral pile led to Tether paying over $40 million to settle with a US watchdog in 2021. The company has since begun publishing quarterly attestations of its reserves, aiming to provide transparency to investors.
Furthermore, Tether has been under fire for its role in terrorism financing and human trafficking, particularly in Asian markets. A report by the United Nations Office on Drugs and Crime highlighted the use of Tether in illegal betting operations by organized crime groups in China. In response, Tether has reiterated its commitment to combating the criminal use of cryptocurrencies.
On a positive note, Tether's rising market capitalization reflects increased demand from investors entering the crypto market. The recent approval of multiple Bitcoin exchange-traded funds by the US Securities and Exchange Commission has further fueled interest in cryptocurrencies. Additionally, Tether is witnessing growing demand from developing nations like Nigeria, where citizens seek stability amidst volatile national currencies.
The integration of Tether with the Tron network has also contributed to its market capitalization growth. With over $50 billion USD circulated on Tron, surpassing Ethereum's circulation, market makers and large investors favor the network for its lower transaction fees.
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