Tether’s stablecoin (USDT) market capitalization reached $81.5 billion on Thursday, hitting its highest level since the Terra collapse in May 2022. It is now only $2 billion short of the asset’s all-time high of $83.4 billion, recorded on May 1, the previous year.
Since the beginning of 2023, the company has minted $15 billion in new USDT, coinciding with a nearly 15% increase in the stablecoin’s market share. This growth can be partly attributed to its closest competitors — Circle’s USD Coin (USDC) and Paxos-issued Binance USD (BUSD) — experiencing a significant portion of their on-chain value being redeemed for dollars after separate disputes. Tether’s market share now stands at 63%, the highest it has been in two years.
On Thursday, over a billion USDT was minted, but it has yet to enter circulation, as per a tweet from Tether CTO Paolo Ardoino.
Although the new supply was designated for Ethereum, most USDT resides on Tron — approximately 45 billion tokens, as stated on Tether Limited’s transparency page.
Native USDT on the other blockchain networks where it is issued — such as Algorand, Avalanche, Bitcoin Cash’s Simple Ledger Protocol (SLP), EOS, Kusama, Liquid Network, Omni, Polygon, Tezos, Solana, and Statemine — makeup only a small portion of the total supply.
House Financial Services subcommittee on Tether’s dominance
Tether was a topic of discussion at this week’s House Financial Services subcommittee hearing on stablecoins in Washington, D.C. The primary focus was the absence of federal regulations for stablecoin issuers in the United States.
When Rep. Warren Davidson, R-Ohio, questioned Tether’s dominance, witness Austin Campbell pointed to the stablecoin’s “first-mover advantage,” which allowed Tether to become an “entrenched incumbent.” Campbell, an adjunct assistant professor of business at Columbia Business School, also highlighted the benefit of Tether being located outside the United States.
“Tether has not faced the same kind of regulatory uncertainty,” Campbell said, adding that the lack of transparency into Tether’s reserves puts stablecoin users at risk. “However, when they are the default option when others are being hamstrung, it’s what people use because there’s demand for dollars on a blockchain.”
Davidson referred to his previous description of Tether as a “time bomb” and concluded, “the real opportunity for us is for this body to create legal clarity,” with the aim of making it easier for stablecoin issuers to operate in the United States.
Tether has yet to issue its Q1 2023 quarterly attestation, but its ongoing growth in the stablecoin market highlights the confidence of market participants, despite harsh headlines about Tether’s “deception” and Congressional concerns. Tether dismissed the report as “outdated, inaccurate, and misleading” in a blog post and maintained that “Tether operates under substantial financial regulations.”