FameEX Hot Topics | Tether's Supply Reaches $80B for the First Time Since May 2022

On April 6th, Tether’s circulating market capitalization hit $80 billion for the first time since May 2022, with a $15 billion gain so far in 2023. This rise in popularity of Tether comes amidst growing concerns around USD Coin (USDC) and Binance USD (BUSD), which have experienced market capitalization slips due to their exposure to now-collapsed Silicon Valley Bank and additional exposure to Silvergate Bank respectively. Additionally, New York regulators ordered Paxos to shut down BUSD issuance, leading to a decrease in its market capitalization as well. USDC weathered the crisis due to the Federal Deposit Insurance Corporation’s assurance that it would make depositors at insolvent banks whole, allowing the stablecoin to recover its dollar peg after losing it in mid-March.

However, a growing crypto crackdown in the U.S. has led investors to maintain a distance from regional firms, prompting them to opt for Tether, which is a non-U.S. firm that has assured traders that it has no exposure to insolvent U.S. banks. Nonetheless, Tether has faced scrutiny over its reserve assets and lack of proper audits for years, despite such issues becoming less of a concern among traders. Interestingly, the growth in Tether's circulating supply has coincided with a drop in its supply across exchanges. According to Glassnode, Tether's balance on exchanges has dropped 28% year-to-date to 12.88 billion USDT, while the aggregated stablecoin balance across exchanges has dropped by 41% YTD to $22.31 billion.

The rise of Tether's supply has been steady since its inception, but it has also raised concerns among some critics. Tether claims to have a 1:1 ratio of U.S. dollars held in reserve for every Tether issued, but the company has been criticized for not providing regular, independent audits to support its claims. Additionally, Tether has been linked to controversies such as the 2018 Bitfinex scandal, which saw Bitfinex and Tether accused of creating fake USDT to artificially inflate Bitcoin prices. Despite these concerns, Tether remains a popular choice for crypto traders due to its stability and liquidity.
Overall, the growth in Tether's supply and its popularity among traders may signal a shift away from other stablecoins that have faced recent challenges. However, it remains to be seen whether Tether can continue to maintain the trust and confidence of the crypto community amid ongoing scrutiny and controversies.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.