Since more users are flocking to foreign platforms, the United States is witnessing a dropping demand in stablecoin trading volume. Stablecoins represent over 50% of all on-chain transaction volume on centralized exchanges. Coins pegged to the US dollar are undergoing a significant transformation.
As per intelligence firm Chainalysis, “more crypto users are pursuing stablecoin-related activity with trading platforms and issuers headquartered abroad.”
Tether (USDT) with a 67.6% share is the most dominant. It is only being challenged by the declining market capitalization of Binance USD (BUSD) and Frax (FRAX). The total market cap of stablecoins currently stands at $124.56 billion.
Data also revealed that stablecoins were half of all on-chain transactions between June 2023 and July 2022. However, a majority of stablecoin inflows to the top 50 crypto services are moving from US-licensed exchanges to foreignones. 54.6% of stablecoin inflows to these top services were directed to non-U.S. licensed exchanges in June.
Regulatory issues with stablecoins
Stablecoins are a great concern for US regulators since majority are pegged to the US dollar. On the other hand they remain integral to the cryptocurrency ecosystem. Chanalysis’ report underscored the importance of vigilant regulatory efforts.
Since most of the assets are pegged to their USD-denominated reserves, the U.S. government is keen on exerting regulatory authority.
Jason Somensatto, Head of North American Public Policy at Chainalysis, believes that regulatory complexities can be resolved. It should be done in the interest of global competition and regulation.
These debates are resolvable and should be solved soon in the interest of global competition and necessary regulation
The U.S. House Financial Services Committee, published a new draft of a stablecoin bill from April. It proposes changes like giving the Federal Reserve control over stablecoins from nonbank companies. It would also introduce a ban on algorithmic stablecoins
The stability of stablecoins and the approval of a Bitcoin ETF are topics that will undoubtedly shape the future of crypto.