The US Treasury Department is still planning a stablecoin crackdown, although, stablecoin Tether’s dominance has fallen to 56%, USDC and BUSD have surged to 23.9% and 10.4% respectively.
The US Treasury Department is preparing a review that will focus on the issues created by stablecoin redemptions as well as the impact of a prospective run on the crypto asset market.
Treasury officials are preparing regulatory proposals, according to a Sept. 16 Bloomberg article citing unidentified sources, to ensure stablecoin holders can freely convert between their tokens and other assets.
The lawmakers seek to alleviate “the most pressing vulnerabilities” linked with Tether (USDT) and other stable tokens, according to the report, while also underlining the dangers a “fire-sale rush” on crypto assets could have to financial stability in general.
Tether’s redemption process and backing have long been criticized, with some users claiming to have been unable to convert USDT to cash using the company’s website over the years.
Tether has issued attestation reports saying the stablecoin is backed by $62.6 billion in assets, 49 percent of which is commercial paper and just 10% in cash and bank deposits, after failing to deliver promised audits for years.
While Treasury officials are apparently particularly concerned about Tether, USDT’s once-dominant position in the stablecoin markets is eroding, with the token’s relative market share falling by 25% since the start of 2021.
According to CoinGecko, Tether’s dominance over the stablecoin sector has plummeted by one-quarter to 56.5 percent of the total stable token market cap today, down from 76 percent at the start of the year.
During Tether’s collapse this year, USD Coin (USDC) and Binance USD gained significant market share, rising from 13.7 percent and 3.40 percent of stablecoin capitalisation to 23.9 percent and 10.4 percent, respectively.
Decentralized stable tokens grew significantly in 2021, with TerraUSD increasing from 0.65 percent to 2.11 percent and MakerDAO’s DAI rising from 4.23 percent to 5.13 percent.
According to CoinGecko’s data, Paxos Dollar’s market share has decreased from 1.15 percent to 0.85 percent. During 2021, however, the overall market cap of every stablecoin tracked by CoinGecko increased.