"Brace Yourself, Tether"...USD Coin Strikes Back Backed by the U.S. [Hwang Doo-hyun's Web3+]

USDC Hits All-Time High Market Cap on the 5th

22%↑ YoY...Tether Only Up 3%

U.S. Moves to Regulate Stablecoins

"Regulation-Friendly USDC Has the Advantage"

The market capitalization of the stablecoin USD Coin (USDC) has reached its highest point in 2 years and 8 months, showing a strong upward trend. After facing a crisis due to the collapse of Silicon Valley Bank (SVB) in 2023, USDC is now threatening the position of its competitor stablecoin Tether (USDT) with the support of the U.S. government.

On the 5th, USDC's market cap surpassed $55 billion, exceeding the previous high of $54.9 billion recorded in June 2022. Continuing its upward trend, USDC's market cap reached $56 billion as of the 12th, marking an approximately 22% increase from the previous month. During the same period, the market cap of Tether, the leading stablecoin, only increased by 3%.

Changes have also been observed in market share. Tether still holds the top spot with a 64% share, but this is a decline from last year's 75%. Meanwhile, USDC's market share has risen by 6% from the previous year to 25%.

Two years ago, during the SVB collapse, USDC experienced a 'depegging' crisis, where its price, which should have been fixed at $1, plummeted to the $0.8 range. This was due to 8.25% of Circle's reserves being tied up in SVB, causing a severe liquidity crisis. At that time, investors exchanged USDC for Tether despite incurring losses, and USDC's market cap fell to $24.1 billion.

After the U.S. government announced full protection of SVB deposits and Circle unveiled plans to secure additional liquidity, USDC has been on a rapid rise this year. The cryptocurrency industry cites the U.S. government's push for stablecoin regulation and the active support of the Nasdaq-listed cryptocurrency exchange Coinbase as factors contributing to USDC's growth.

U.S. Accelerates Stablecoin Legislation..."Advantage for Regulation-Friendly USDC"

David Sachs, the U.S. White House crypto czar, speaking at a press conference on the 4th (local time). /Photo=U.S. Senate Banking Committee X

The U.S. Congress is actively pursuing stablecoin regulation legislation with the launch of the Trump 2nd administration. David Sachs, the White House crypto czar, stated at a press conference on the 4th that preparing and passing stablecoin legislation is a major goal, as stablecoins are seen as playing a crucial role in maintaining the international dominance of the dollar.

Currently, the U.S. Senate and House have each introduced stablecoin regulation bills: the 'Guiding and Establishing National Innovation for US Stablecoins (GENIUS)' and the 'Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE)' bills.

The GENIUS bill, aiming for Senate passage within 100 days, includes provisions such as requiring regulatory approval for stablecoin issuance in the U.S., oversight by the Federal Reserve for stablecoins with a market cap exceeding $10 billion, and holding reserves in a 1:1 ratio of U.S. dollars and Treasury bonds.

The industry believes that if such legislation passes, it will favor USDC's growth. As the Trump administration shows a willingness to reorganize the cryptocurrency industry around the U.S., USDC, which has been operating in a regulation-friendly manner, is expected to benefit the most if stablecoin regulations are strengthened.

Kim Kyu-yun, CEO of the domestic cryptocurrency brokerage firm HappyBlock, told Bloomingbit, "USDC is a stablecoin with strengths in regulatory compliance and interoperability," and predicted, "If the stablecoin regulation bill passes, global financial institutions are more likely to hold and use USDC for asset regulation compliance."

Coinbase Leading USDC Expansion..."Possibility of Tether Delisting"

The U.S. Nasdaq-listed cryptocurrency exchange Coinbase is also leading the expansion of USDC. Recently, it launched a new service supporting USDC loans backed by Bitcoin, aiming to expand USDC's use cases and strengthen liquidity.

Brian Armstrong, CEO of Coinbase, has actively promoted USDC, publicly suggesting on X (formerly Twitter) that X should adopt USDC as a payment method. At the Journal House event held in Davos, Switzerland, on the 21st of last month, he stated, "If stablecoin regulations are implemented in the U.S., Tether could be delisted."

Tether is closely monitoring the situation. The European Union (EU) has introduced the 'Markets in Crypto-Assets (MiCA)' regulation, leading to pressure as cryptocurrency exchanges in Europe delist Tether one after another.

Paolo Ardoino, CEO of Tether, stated in a recent interview with Bloomberg, "We do not rule out the possibility of entering the U.S. market if clear regulations and guidelines are in place." He also emphasized that Tether's growth could aid the U.S. economy and strengthen the international status of the dollar, attempting to improve relations with the U.S. government.

Lawrence Alba, Head of Business Development at Roma Protocol, predicted, "If Tether fails to meet U.S. regulatory standards, many trading platforms will voluntarily reduce their exposure to Tether."

Hwang Doo-hyun, Bloomingbit Reporter cow5361@bloomingbit.io