The largest stablecoin in the world, USDT, has experienced tremendous growth as a result of the current regulatory attention that the stablecoin industry has experienced. As previously reported, when US regulators dubbed the stablecoin BUSD an unregistered security, Paxos Trust Corporation, located in New York, declared it will stop releasing new tokens. Investors are already speculating about stablecoins' future as a result of the action.
The market capitalization of USDT has increased significantly, rising by $1.9 billion to $70.3 billion. Circle's USD Coin, the second-largest stablecoin, has also increased, rising by over $700 million to $42 billion. The market value of BUSD has decreased from $16.1 billion to $12.9 billion, and its market share has decreased from 12.1% to 9.4%.
The regulatory issues with BUSD have had a little effect on the overall crypto market, with Bitcoin increasing 14% to $24,902 over the previous week. The market appears to have adjusted, however there is still some ambiguity on how the SEC's decision would affect other stablecoins.
According to Arcane Research analyst Vetle Lunde, the decision is not currently anticipated to result in a significant structural upheaval in the industry. Enforcement against USDC or the foreign parties, whether USDT is domiciled, might have more significant effects.
Moreover, the commotion around Binance's stablecoin has increased trade activity on other exchanges. Data analytics company Kaiko reports that since February 1st, Coinbase's bitcoin liquidity in the United States has grown by roughly 15% while Binance's has plummeted by over 30%.
With its ability to grant access to both well-known and obscure crypto assets, tokens, and assets, stablecoins continue to be a prominent influence in the cryptocurrency market. Yet, the deterioration of BUSD's dominating position as a result of regulatory concerns might result in a comeback for USDT. It is unclear which stablecoin will become the dominating force as the market continues to change.
