Mon, 18 Oct 2021

After the crypto-asset market has experienced a round of explosive growth, the stable currency market has expanded to hundreds of billions of dollars, making it difficult for this particular category of crypto-assets not to be paid attention to by regulation.

U.S. regulators have repeatedly mentioned formulating a regulatory framework for stable currencies to improve financial stability in recent months. In the past few years, USDT's market monopoly has been eroded by latecomers. In May of last year, USDT's market share exceeded 80%.

Latecomers, such as the regular release of audit reports and USDC, which emphasizes openness and transparency, have grasped the pain points of the opacity of USDT's long-term reserves, gradually expanded the market scale, and have gained more and more support from users and platforms. With the iterative update of the regulatory authorities, the crypto market will also become more orderly.

The U.S. releases a stable currency supervision signal, USDC reorganizes reserves.

With the growth of the encrypted asset market, the scale of stable currency issuance has also become larger and larger. As a result, more and more miners are joining the mining industry, so miners have become the first choice. How to choose a good miner,

This market of more than 100 billion U.S. dollars has attracted the attention of various countries' supervision. As a result, the U.S. regulators have discussed several times to propose a regulatory plan for a stable currency.

In the July meeting minutes, Officials focused on discussing the potential threats that a stable currency might pose to financial stability. Participants said that stable currencies seem to have the same vulnerabilities as significant currency funds and generally lack transparency. Therefore, it is essential to monitor them closely. In addition, an appropriate regulatory framework needs to be developed to address any financial stability risks associated with such products.

Before this, Fed Chairman Powell also publicly stated the urgency of monitoring stable currencies. This move also wanted to show the outside world that the reserves behind the USDC have sufficient stability and liquidity to ensure that the market can carry out redemption transactions at any time.

Some people believe that the reserve fund's commercial paper, bonds, and other assets are highly volatile and lack liquidity, making it difficult to cope with large-scale redemptions.

Compared with USDC's conversion of reserves into cash and U.S. Treasury bonds, the combination of USDT's reserves is much more complicated, with greater volatility and less liquidity.

Stable currency market share changes again, USDT gradually loses its monopoly position.

Regulatory authorities formulate a regulatory framework around stable currencies, which is a protection for market investors. For stable currency issuers, the intervention of supervision will put forward higher compliance requirements, which is likely to become an essential factor in intensifying changes in the stable currency market.

As the stable currency market has grown in the past few years, the market share has also quietly changed. Before 2018, the stable currency market was almost the dominant USDT, occupying more than 90% of the market share. Later, PAX, TUSD, USDC, and other more transparent and compliant stable currencies are available, and the stable currency market has changed.

Nowadays, the U.S. regulatory authorities have made it clear that they will strengthen the supervision of stable currencies, which is more beneficial to the USDC, which is following the compliance route. As a latecomer in this market, USDC has learned a lot of lessons from USDT. It has always used openness and transparency as its killer, and it has continuously taken market share from USDT.

From the perspective of investors, whether it is the establishment of a stable currency regulatory framework or the increasingly fierce competition between stable currencies, it is ultimately conducive to transforming the market from disorder to order, thereby protecting the interests of investors.

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