The U.S Treasury Department is trying to put emphasis on challenge’s posed by stablecoin redemptions and the effect of a possible run on the crypto asset market
The U.S Treasury Department is trying to put emphasis on challenge’s posed by stablecoin redemptions and the effect of a possible run on the crypto asset market. Based on a report from Bloomberg by anonymous sources, Treasury officials are preparing policy recommendations created to let the stablecoin holders can openly transform between their tokens and other assets.
The report said that the lawmakers will try to mitigate “the most urgent risks” related with Tether (USDT) and other stable tokens trying to highlight the threats a “fire-sale run” on crypto assets could impose for financial stability broadly. Critics have always criticized Tether’s redemption process and supporting this by asserting that it is not possible to redeem USDT for fiat using the company’s website over the years.
With back-to-back failed attempts to deliver the promised audits Tether recently published attestation reports stating that stablecoin is supported by $62.6 billion in assets 49% of which is commercial paper while cash and bank deposits with 10%. There are treasury officials who are worried about tether as the once hegemonic status of USDT over the stablecoin markets is fading with the token’s relative market share which is reducing by 35% since the beginning of 2021. At the beginning of the year, it was representing 76% of stablecoin capitalization, Tether’s power over the sector has reduced by one-quarter to represent 56.6% of combined stable token market cap today.
This year witnessed USD Coin (USDC) and Binance USD capture important market share and Tether’s decrease with USDC and BUSD growing from 13.7% and 3.40% of stablecoin capitalization to 23.9% and 10.4% today.