Tether, one of the leading stablecoins, reported record profits, and a substantial increase in market capitalization. This reflects an increasing demand for USDT and its stability. Project Pyxtrial is a joint venture between Bank for International Settlements and Bank of England that aims to improve regulatory oversight of stablecoins and boost market confidence. Stablecoins continue to rise in popularity, as evidenced by the increase of market capitalization and dominance.
Tether Reports $5.2 Billion in Net Profits for H1 2024; USDT market cap reaches all-time highs
Tether, a prominent stablecoin, revealed on Wednesday it had achieved record profits of $5.2 billion for the first six months of 2024. The market cap of USDT (its flagship currency) has soared at unprecedented levels. This feat is a testament to the importance that Tether holds in the cryptocurrency industry.
Tether has reported an impressive $1.3 billion net operating profit for the second half of this year. These profits have been re-invested strategically into projects that aim to improve the infrastructure of the company and expand its market reach. Tether’s reinvestment in “strategic project” shows its commitment to sustained growth and innovation.
According to the latest quarterly report, which was signed by BDO Italy accounting firm, Tether International Limited, and Tether Limited held $118.4 Billion in assets, compared with $113.1 Billion in liabilities, as of June 30, 2018. The excess reserve is $5.3 billion, which provides a solid foundation for Tether’s stablecoins. It also reinforces the financial stability of the company.
Tether has a significant amount of U.S. government debt worth $97.6 Billion, which puts it in a good position on the financial market. Tether would be the 18th biggest holder of U.S. Debt globally with these holdings, which surpasses countries like Germany, United Arab Emirates and Australia.
Tether Investments is a division separate from stablecoins that has played a key role in the management of the diverse portfolio. The entity has a net equity of $6.2 billion, which demonstrates Tether’s increasing forays into different sectors such as Bitcoin mining (BTC) and artificial intelligence.
USDT is a keystone in the crypto-market, providing a way to trade and access U.S. Dollars, especially for developing countries. USDT continues to grow in popularity. According to CoinGecko’s market valuation of $114 Billion, it is up from $91 Billion earlier this year. The USDT’s role as a stablecoin that facilitates liquidity in an unstable crypto market is what has made it the world’s most popular.
Addressing Scrutiny & Ensuring Transparency
Tether’s reserves have been scrutinized over the years. Howard Lutnick of Cantor Fitzgerald – a Wall Street bank which manages some of Tether’s assets – addressed these concerns by confirming that Tether has enough reserves to support its stablecoins.
In other news, both the Bank for International Settlements and Bank of England have taken significant steps in their supervision of stablecoins that are asset-referenced. They announced on Wednesday the development of an innovative prototype data analytics pipeline, Project Pyxtrial. This is a groundbreaking effort to improve the oversight of the balance sheets of stablecoins.
The Project Pyxtrial data pipeline is a state-of-the-art tool that can provide supervisors near-real-time insight into the liabilities of stablecoins and their assets. The technological advance is a crucial step in the creation of a tool which could allow supervisors to detect problems with stablecoins backing.
The market cap of stablecoins (digital coins that are pegged to assets like fiat currency) has grown rapidly and is currently at $163.7 billion. The sector is largely unregulated, and there are no sophisticated technologies to monitor it. Project Pyxtrial was created to address this regulatory hole and improve the transparency and stability of stablecoins.
BIS/BoE’s report highlights the risks of stablecoins. In particular, the mismatch that could occur between the liabilities (coins) and assets (assets backing the stablecoins). These discrepancies can undermine the confidence of investors in an issuer’s ability to redeem its stablecoins for their par value. This could trigger a “run” whereby holders rush to redeem them, resulting in a sudden drop in value.
The central banks have been highlighting the vulnerability of stablecoins against such attacks for a long time. The U.S. Federal Reserve warned two years ago that stablecoins, backed by national currency, could be at risk if they suddenly dropped in value. Lack of transparency about the liquidity and risk of stablecoin assets exacerbates this vulnerability, which is why robust supervision tools such as those developed by Project Pyxtrial are essential.
Global Regulatory Frameworks Enhancement
Financial Stability Board is currently examining the global requirements which could be applied to stablecoins. The aim of this study is to reduce risks and increase the resilience in the financial system. Project Pyxtrial aligns its innovative technology with these efforts, providing a framework to monitor and supervise stablecoins in real time. This will support the development of international regulatory standards.
BIS noted also that Project Pyxtrial’s data-analytics capabilities may extend beyond stablecoins and monitor tokenized goods backed by actual assets. The BIS also noted that Project Pyxtrial could extend its data analytics capabilities beyond stablecoins to monitor tokenized products backed by real-world assets.
Project Pyxtrial’s successful implementation brings to light the crucial role that technology plays in improving financial regulation and supervision. Pyxtrial’s near-real-time analytics and data allows supervisors and regulatory agencies to identify and resolve issues in the digital assets sector proactively.
Project Pyxtrial’s insights and tools will prove invaluable as stablecoins grow in popularity. They can help maintain their stability, and prevent disruptions to the financial system. This collaboration sets an example for other regulators to follow suit and adopt the same technological innovations. It will ensure a resilient and secure future for digital financial services.
Stablecoins to Surge by 2024 as Market dominance increases with new trends emerging
In 2024, cryptocurrency will continue to experience unprecedented changes. For example, spot Bitcoin ETFs and Ethereum ETFs are being launched. In the midst of these developments, another important trend emerged: The sustained growth in stablecoins. In the last ten months stablecoins not only have maintained their upward trajectory, but also have increased their dominance on the market to 6,93%.
A report by CCData shows that the stablecoin total market cap increased by 2.11%, to $164 billion, in July. The increase is the result of an upward trend for stablecoins that has lasted ten months.
The largest stablecoin, Tether (USDT), experienced a growth of 1.61%, which brought its market capitalization up to a record high of $116 Billion. USDT’s market dominance has increased to 69.6%, marking the 11th month in a row that it increased.
Market caps for other notable stablecoins such as USD Coin (USDC), BlackRock BUIDL and PayPal USD were also increased. PayPal USD, which rose 17.9%, to $589,000,000, was the biggest gainer of the top 10 stablecoins. This is a record high. Stablecoins such as First Digital USD and Ethena USDe, on the other hand, saw their market cap decrease.
The volume of stablecoins traded in July fell 8.35% to $795 Billion despite the increase in market capitalization. The decline in trading volumes was due to a lack of activity at centralized exchanges. Overall trading volumes will continue to rise, largely due to the launch of Ethereum spot ETFs, and the positive sentiment that was expressed during the Bitcoin 2024 Conference.
Recent Markets in Crypto-Assets Regulations in Europe (MiCA), have also had an impact on trading. Stablecoin issuers are required to obtain e-money licences and keep significant reserves in order to enhance market security. These requirements have been met by major stablecoins such as Circle’s USDC or EURC. USDC has continued to be the most popular stablecoin on central exchanges due to its MiCA compliance.
USD Coin (USDC), A Rising Star
The CCData report highlights the significant increase in USDC’s market cap, trading volume and market capitalization. USDC is now the second largest stablecoin in terms of market capitalization. USDC accounts for 73.5 percent of market share in the top 10 stablecoins.
The trading volume on USDC pair on central exchanges increased by 48.1%, reaching $135 billion. The USDC compliance with MiCA regulations that took effect late last month in Europe is the main reason for this increase.
Bankless’s July 31 deep dive analysis highlighted USDC’s dominance in the Solana eco-system. Bankless estimates that USDC represents approximately 70% of Solana’s stablecoin total supply. USDC trading volume on Solana is 19 times greater than USDT, even surpassing that of top ERC tokens.
Bankless attributed USDC’s dominance of Solana blockchain to the strategic initiatives taken by Circle and Solana Foundation. These have encouraged developers and promoted integration with trading platforms. USDC-based grants for developers from Superteam and Solend Protocol, which are provided by the platforms, has attracted many more developers to Solana’s blockchain. Circle’s Cross Chain Transfer Protocol and Web3 Services are also aiming to unite DeFi, and make USDC the most dominant stablecoin for Solana.
