The market capitalization of Tether (USDt) has reached USD 50 billion. In the last year, the world's largest stablecoin has added an astounding 45 billion to its market cap, doubling its assets.
Tether Ltd, based in Hong Kong, launched USDt in 2014 under the name Realcoin. Its aim was to provide a 1:1 representation of USD in the crypto space by holding USD in reserves to back the asset. USDt was launched at a time when access to services like banking was difficult for crypto companies, and it provided a kind of fiat on-ramp for them. USDt continues to provide a way to avoid the friction of fiat deposits for crypto-to-crypto exchanges.
Tether and Bitfinex, which share management, were the subject of an investigation by the New York Attorney General (NYAG) in 2019. The inquiry centred on a USD 850 million loan made by Tether to Bitfinex, which was resolved in February without the two companies acknowledging any wrongdoing. Tether promised to provide NYAG with records that substantiate the reserves backing USDt on a regular basis, as well as to bolster efforts to keep New York residents out of their programmes.
Tether released a "assurance opinion" from Moore Cayman in March, "confirming the information in the company's Consolidated Reserves Report is correct." Coinbase revealed last week that it would list the USDt. Stablecoins in general have gotten a lot of attention in recent years, particularly after Facebook launched its digital currency project, Libra, in 2019, which has since been renamed Diem.
Global legislators and regulators responded angrily to Diem's behaviour, with US lawmakers holding several Congressional hearings on the subject. During a hearing, Rep. Maxine Waters, Chairwoman of the House Financial Services Committee, said, "It should be obvious that we are concerned about your attempts to create a global digital currency to compete with the [USD]." "We must do everything possible to ensure that the currency monopoly remains in the hands of states," Germany's Finance Minister said of Diem last year.
According to Google search results, the countries with the most interest in USDt were China, Cuba, Laos, and Turkey, all of which have restricted access to the US dollar.
Between the announcement of the NYAG's inquiry into Tether and the settlement of the lawsuit, USDt's market cap increased by approximately USD 32 billion. Despite the NYAG's arguments, this growth indicates that crypto incumbents haven't lost faith in the asset. Furthermore, since the announcement of Diem, foreign lawmakers have been fixated on stablecoins, and Tether has effectively navigated this regulatory uncertainty. The inclusion of the coin to Coinbase, a publicly traded exchange, supports this viewpoint.
This creation could help to allay some concerns about Tether's regulatory risks. Tether's continued importance in the crypto ecosystem is evidenced by developments such as its USD 50 billion milestone and NYAG settlement, both of which represent the massive growth and interest in the space over the last year.
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