As of July 2024, the turnover of Tether (USDT) reached $113.13 billion, marking a significant milestone for the stablecoin market since the collapse of Silicon Valley Bank (SVB) in March 2023. This event was a turning point for the stablecoin industry, as many traditional financial institutions began to transition to USDT in search of stability and reliability.

Vincent Meliépaard, Director of Marketing at IntoTheBlock (ITB), noted that the availability and liquidity of USDT are key factors in its dominance in the stablecoin market.

Growth of Stablecoin Market Capitalization

Following the collapse of SVB, the overall growth in the market capitalization of stablecoins continued. According to ITB data, the capitalization increased from $137.86 billion in December 2022 to approximately $150 billion by July 2024. This indicates the growing global influence of stablecoins, supported by regulatory initiatives such as the new stablecoin issuer guidelines developed by the Swiss Financial Market Supervisory Authority (FINMA).

Trust in stablecoins and their liquidity have increased, leading to higher transaction volumes. Specifically, stablecoins like DAI, FDUSD, and USDM have witnessed transactions exceeding $100,000.

Position of USDC

Second to USDT is Circle USD (USDC), which has also achieved significant success. In July 2024, USDC became the first global stablecoin issuer to comply with the European Union's new Markets in Crypto-Assets (MiCA) regulatory framework. However, despite a market capitalization of $33.71 billion, USDC lags significantly behind USDT's $113.13 billion capitalization.

Explaining USDT's success, Meliépaard noted that USDT plays a role beyond decentralized finance (DeFi) and trading.

Illicit Use of USDT

However, not all aspects of USDT's use are positive. A report by Elliptic Research on July 10 revealed that the Cambodian conglomerate Huione Group was involved in facilitating online fraud in Southeast Asia. Transactions totaling over $11 billion, related to money laundering and cyber fraud, were conducted through the Huione Guarantee trading platform, primarily using USDT.

Nevertheless, the use of USDT has significantly simplified the tracking of illicit funds through the public digital ledger of the blockchain, compared to traditional fiat flows. This advantage allows for more effective combating of illicit financial operations.

Conclusion

The growth in turnover and market capitalization of Tether, despite economic challenges and instances of illicit use, demonstrates its significance in the stablecoin market. The availability and liquidity of USDT continue to attract traders and investors, making it a key element in the cryptocurrency ecosystem. Regulatory successes of USDC and the strengthening positions of other stablecoins also indicate that the stablecoin market will continue to grow and develop in the coming years.