Tether (USDT) emerges as the biggest beneficiary of BUSD’s troubles

Adeniyi Odukoya
The mission of Tether around the world

Market leader tether (USDT) has added $1.9 billion to its market capitalization, reaching a staggering $70.3 billion after the news of US Securities and Exchange Commission allegations that the Binance USD (BUSD) was not a registered security.

CoinDesk reported last week that Paxos, the company that issued the Binance USD (BUSD) stablecoin, is under investigation by the New York Department of Financial Services. However, the scope of the NYDFS’s investigation is unclear.

Paxos, a New York-regulated trust company, also enjoys a provisional charter from the Office of the Comptroller of the Currency, a federal bank regulator has said it “categorically disagrees with the SEC staff because BUSD is not a security under the federal securities laws.”

The mission of Tether around the world

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A Binance spokesperson told CoinDesk: “BUSD is a stablecoin wholly owned and managed by Paxos. As a result, the BUSD market cap will only decrease over time. Paxos will continue to service the product, manage redemptions, and follow up with additional information as required.

“Given the ongoing regulatory uncertainty in certain markets, we will be reviewing other projects in those jurisdictions to ensure our users are insulated from further undue harm.”

The response has enormously impacted the stablecoins’ ecosystem, leaving many investors with unanswered questions. Some of these unanswered questions lingering in the hearts of these investors include what the future shape of the market for stablecoins would look like following the U.S. SEC allegation and Paxos’s decision to desist from issuing Binance’s stablecoins.

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Stablecoins are usually pegged against an asset and are used to control the volatile rhythm of the crypto market. Some of the largest stablecoins are Tether (USDT), BUSD, and Circle’s USD Coin.

The impact of BUSD’s allegation has not been bullish for the stablecoin market in particular. However, since the announcement by Paxos on the 13th of February, the market’s total value has grown by $2 billion. Hiro Alex Miller, CEO of the Bitcoin developer network, has this to say about the current situation with stablecoins:

“There is way too much demand for dollar-based stablecoins for them to go away.”


Tether enjoys a massive increase

According to CoinGecko.com, BUSD’s rivals like Tether are exploring the situation to increase their market capitalization enormously. BUSD, regarded as the world’s third-biggest stablecoin, has seen its market value drop from $16.1 billion to $12.9 billion, with its market share narrowing to 9.4 per cent from 12.1 per cent. 

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Tether has been the biggest beneficiary of this situation. It has added $1.9 billion to its market valuation. Now, it commands 52.6 per cent of the stablecoin market, while Circle’s USD Coin—the second-biggest stablecoin—increased by $700 million, hitting $42 billion, improving its market share to 31.3 per cent from 30.9 per cent.

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The future of stablecoin is not unsure, and investors should rest assured. Stablecoins are here to stay, and their roles are incontestable. Markus Thielen, head of research and strategy at crypto firm Matrixport, said the Paxos announcement and subsequent slump in BUSD had caused a big shift in the stablecoin market.

While the impact of the US Securities and Exchange Commission ruling on other stablecoins remains to be seen, some experienced crypto players believe that the market appears to have adjusted..

“This is unlikely to represent a critical large structural change to the market, for now,” said Vetle Lunde, an analyst at Arcane Research. He added: “Enforcement against USDC or the non-US domiciled USDT, could have more dramatic implications.”

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