The top 10 stablecoins by market capitalization saw significant decreases, with BUSD and FRAX being the most affected. BUSD’s market cap decreased by 19.2% to $2.5 billion, while FRAX’s share fell by 16.7% to $670 million.
Thin Markets Lower Trading Volumes
The decline in BUSD comes as no surprise, given the order from New York’s financial regulator to halt the minting of the coin. On the flip side, PYUSD, a newcomer to the scene, witnessed a remarkable fourfold increase in trading activity from August to September. Among exchanges, Huobi claimed the lion’s share of volumes at 57%, while USDT, now the largest stablecoin by market cap, saw its valuation rise by 0.23% to $83 billion.
Despite the overall surge in stablecoin trading volume to $462 billion in August, activity on centralized exchanges remains subdued. The combination of uncertain regulations and challenging macro conditions is steering investors towards safer government investments, such as treasuries.
As a result, stablecoins, often viewed as a bridge between traditional finance and crypto, may be losing popularity as investors favor less risky ventures. In a recent thought-provoking piece for the Wall Street Journal, Brian P. Brooks, the former US Acting Comptroller of the Currency, proposed that properly regulated US dollar-backed stablecoins could counter foreign attempts to de-dollarize.
New Opportunities Await Asian Stablecoins
The global drive towards tokenization has ignited the growth of non-US dollar-backed stablecoins, amplifying their value propositions. In a groundbreaking move, Mitsubishi UFJ Financial Group, a renowned Japanese bank, unveiled its revolutionary Progmat stablecoin platform in June. This platform empowers banks to issue assets on various public blockchains like Ethereum and Polygon.
Exciting developments are also taking place in Japan, where digital lender Minna Bank, Tokyo Kiraboshi Financial Group, and Shikoku Bank are set to introduce stablecoins backed by the Japanese yen. These stablecoins will operate on the cutting-edge platform provided by Tokyo startup G.U. Technologies. Meanwhile, the forthcoming regulations governing SGD-backed stablecoins in Singapore have sparked interest among issuers like StraitsX, the creator of the SGD-backed XSGD stablecoin, and Circle Singapore.