There has been a steady influence of new stablecoins in the crypto market and many actors and analysts believe that more of the stablecoins will still be added to the market in few years to come, since some major cryptocurrency exchanges are now creating their own stablecoin or partnering with other bodies to create one.
The likes of Binance exchange has disclosed that they are partnering to get one in the market, while Gemini exchange were able to get license from the US regulatory authority to launch their own stablecoin called Gemini USD(GUSD). Even Circle was able to launch their own stablecoin Circle USD(USDC).
Prior to the inflow of this new stablecoins in the market, Tether USD(USDT) that came into the crypto market few years ago has gained popularity among crypto traders and investors because of it’s less volatile nature and it’s peg to same value as USD. This has made the coin to always be among the top ten cryptocurrencies in terms of trading volume for some time now.
However, going by the presence of GUSD and USDC in the market, tether USD could be threatened for survival for the following reasons:
1) it is not under regulation: the importance of regulations in the crypto market could not be ignored since studies has shown that one of the countries with a high number of crypto users is the United States (U.S), Regulations breeds trust. The likes of Circle One USDC and Gemini GUSD have gained license to operate in the US unlike USDT. This has increased the trust level for the two stablecoins.
2) Transparency: just recently, tether faced the accusation that it was used in the manipulation of bitcoin value, since it is not destroyed after been issued unlike USDC and GUSD that are also pegged with USD but are destroyed after been used.
Also Recently a Crypto Critic Claimed EOS’s $4 billion ICO was a bailout for Tether (USDT) And Both Have Same Founders, the critic by the moniker of bitfinex’ed said
“Eos needed the money to bail out Tether. That’s why the FSS report was done just as the Eos ICO ended. Both Eos and Tether same founders.”
Less than 3 weeks ago an unknown person sent over 12 million USD to Bitfinex in an unknown transaction, all these has tampered with the reputation of USDT with most now calling it a ‘glorified scam coin’.
3) liquidity : since USDT is not regulated even though it is pegged to the USD, their will not be a government intervention to help it’s survival as recent results has shown that it’s market capitalization is reducing. This is unlike USDC and GUSD.
An Analyst by Name Kruger in an interview with CCN stated that with the launch of more legitimate stablecoins with less regulatory risk and credit, tether will soon no longer have any major impact on the market in the coming months.
“Both Gemini and Circle are US based regulated issuers and thus perceived as more trustworthy, carrying lower credit risk. One should expect a great percentage of all USDT (Tether) holdings to migrate to GUSD (Gemini) and USDC (Circle).”
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