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    USDT Market Share Increases Amid Economic Uncertainty, While USDC Decreases

    In the past year, the market share of Circle's USD Coin has decreased from 34.88% to 23.05%, while Tether's USDT has gained market share.

    The market dominance of stablecoins pegged to the US dollar has experienced some changes in the past year. While most of them have seen a decline in market share, Tether (USDT) has climbed back to its all-time high, according to data from CoinGecko.

    In the last 12 months, Circle’s USD Coin (USDC) has seen a decline in market share from 34.88% to 23.05% at the time of writing. Binance USD’s (BUSD) market participation has also decreased from 11.68% to 4.18% in the same period, while Dai’s (DAI) share of the crypto market was at 3.66%, down from 4.05% in May 2022.

    Meanwhile, Tether’s USDT is gaining market share, with its dominance currently sitting at 65.89%, up from 47.04% a year ago. Its market capitalization has surged to $83.1 billion, while USDC’s market cap has dropped from a peak of $55 billion to just $29 billion.

    Circle CEO Jeremy Allaire has attributed the stablecoin’s declining market capitalization to the crypto crackdown by US regulators in a recent interview with Bloomberg. The current climate in the US appears to be favorable for Tether.

    Source: CoinGecko

    In March, the US banking crisis led to USDC depegging as $3.3 billion in reserves were stuck at Silicon Valley Bank, one of three crypto-friendly banks shut down by regulators. Despite Circle’s reassurances, the market quickly responded to the news, causing USDC to depeg from the dollar.

    Stablecoins have become increasingly popular due to the growing connection between the crypto space and traditional finance. A recent report by the European Systemic Risk Board highlighted the need for more transparency in the digital assets market, particularly for stablecoin reserves.

    Tether has faced criticism for its lack of transparency over the years. The crypto firm, owned by Hong Kong-based iFinex, was fined $18.5 million in 2021 by the New York Attorney General’s Office for allegedly misrepresenting the fiat backing of its reserves. As part of the settlement, the stablecoin issuer was required to provide greater financial transparency.

    Tether’s leadership has responded to the negative allegations on Twitter. Additionally, the company is seeking to reduce its exposure to the banking system following the collapse of Silicon Valley Bank. Its latest audit report shows Tether withdrew over $4.5 billion from banks in the first quarter of 2023, leading to a “substantial reduction” in counterparty risk amid ongoing global economic uncertainty.

    The company also boosted its U.S. Treasury bills to a new high of over $53 billion, or 64% of its reserves. Combined with other assets, USDT is now backed by 85% cash, cash equivalents, and short-term deposits, according to the report.

    A similar move has been made by Circle. The stablecoin operator reportedly adjusted its reserves to mitigate risk in the face of macroeconomic uncertainty and no longer holds Treasurys maturing beyond early June.

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