The market capitalization of Tether (USDT) is currently above USD 30 billion. The dominance of that stablecoin has decreased by 12.52% over the last year.
The market capitalization of stablecoins has risen by more than 820% in the last year. However, the dominance of Tether (USDT) has dropped by 12.52%, according to data from Coin Metrics and CoinGecko.
Percentage data from Coin Metrics indicates that USDT reflected a dominance percentage of 71.95% in recent days. In contrast to that percentage, the stablecoin exhibited 84.47% a year ago.
USD Coin (USDC) was the stablecoin that the pullback of USDT benefited the most since they recently had 16.45% dominance. The penetration of USDC in the market is more than twice what it was a year ago. At that time, the crypto asset had 7.75% of the stablecoin market.
According to a graph, the dominance of stablecoins began to diversify in the year 2018. USDT was the only stablecoin that had an extended presence in the market until December 2017. Among the six most relevant stablecoins, there is 99.69% of the total capitalization of this market.
How the Market Capitalization of Stablecoins Has Evolved
The section of CoinGecko that is dedicated to stablecoins shows the list of these cryptocurrencies pegged to the US dollar. Besides, there is how their market capitalization has evolved over- time.
While the dominance of USDT went from 84% to 71.95%, the total market value of stablecoins increased more than 9 times. The total capitalization of stablecoins went from USD 5,053 million to USD 46,366 million in the last 12 months.
Stablecoins in Bitcoin and Ether Daily Settlement
Two prominent factors drove this dramatic growth in the stablecoin market. The first is the rise of DeFi platforms in 2020, which contributed to the increase in the daily settlement volume of stablecoins. A report from the analysis firm Blockchain Capital indicates that the total said the increase was 300%.
Blockchain Capital also highlights that stablecoins have a growing share in the daily settlement of Bitcoin and Ether. These cryptocurrencies pegged to the US dollar reached 40% of the daily settlement volume of Bitcoin and Ether in 2020.
OCC Regulations on the Use of Stablecoins
Regulators are considering financial institutions using stablecoins as a means of payment. The Office of the Comptroller of the Currency (OCC) authorized US-licensed banks and savings associations. The latter would participate as nodes in public blockchains, such as Bitcoin and Ethereum, where they would process payments with stablecoins.
The OCC authorized the use of new technologies, such as independent node verification networks (INVNs) and stablecoins. This would allow financial institutions to engage in and facilitate payment activities. Likewise, they could store, record, and settle payment transactions, as long as they comply with existing laws.
According to the regulator, using stablecoins to facilitate payments allows capturing the advantages of INVNs to keep the stability of fiat currencies. Stablecoins represent fiat currencies and provide a means to have access to the payment rails of an INVN.
By Alexander Salazar