Despite economic uncertainty, USDT market share increases while USDC declines.

The market share of Circle's USD Coin has decreased from 34.88% to 23.05% over the past year. The USDT in Tether paints a different picture.

Over the past year, there have been some changes in the market dominance of stablecoins pegged to the US dollar. Data from CoinGecko reveals that Tether (USDT) has returned to its all-time high while the majority of them are in a downward trend.

Circle's USD Coin (USDC) has seen a decline in market share over the last 12 months, going from 34.88% to 23.05% at the time of writing. During the same time period, market participation for Binance USD (BUSD) fell from 11.68% to 4.18%, while Dai (DAI) maintained its participation rate at 3.66%, down from 4.05% in May 2022.

The USDT in Tether is trending in the opposite direction. The market dominance of stablecoins is currently 65.89%, up from 47.04% one year ago. While the USDC market cap fell from its peak of $55 billion to $29 billion, its market capitalization increased to $83.1 billion.

In a recent interview with Bloomberg, Circle CEO Jeremy Allaire attributed the stablecoin's declining market capitalization to the regulatory crackdown on cryptocurrencies in the US. The environment in the United States right now seems to be favorable for Tether.

Market Dominance of USD Stablecoins. The coin gecko.

USDC depegged in March as a result of the U.S. banking crisis because Silicon Valley Bank, one of three crypto-friendly banks that regulators closed down, had reserves worth $3.3 billion stuck there. Despite Circle's assurances, the market reacted to the news right away and USDC's peg to the dollar was broken.

Stablecoins have grown in popularity as the relationship between the crypto world and conventional finance has grown. The European Systemic Risk Board recently published a report that emphasized the need for greater transparency in the market for digital assets, particularly for stablecoin reserves.

Over the years, Tether has received harsh criticism for its lack of transparency. The crypto company, which is owned by Hong Kong-based iFinex, was penalized $18.5 million by the New York Attorney General's Office in 2021 for allegedly misrepresenting the fiat backing for its reserves. The stablecoin issuer was also required to show more financial transparency as part of the settlement.

The Tether leadership has retaliated against the false claims made on Twitter. In addition, in light of Silicon Valley Bank's demise, the company wants to lessen its exposure to the banking sector. According to its most recent audit report, Tether withdrew more than $4.5 billion from banks in the first quarter of 2023, which resulted in a "substantial reduction" in counterparty risk despite the ongoing economic unpredictability around the world.

Additionally, the business increased its holdings of US Treasury bills to a record high of over $53 billion, or 64% of its reserves. According to the report, the USDT is now 85% backed by cash, cash equivalents, and short-term deposits when combined with other assets.

Circle has taken a similar action. According to reports, the stablecoin operator reduced the risk in its reserves in response to macroeconomic uncertainty and no longer holds Treasuries with maturities later than early June.