USDT market cap breaks ATH, Binance CEO blames regulatory caps.

The market capitalization of the Tether (USDT) stablecoin has reached a new all-time high (ATH) of over $83 billion, continuing its market dominance.

This new ATH market cap for USDT comes amidst a year where other stablecoin issuers are struggling to keep afloat due to regulatory issues. This was pointed out by the CEO of cryptocurrency exchange Binance, Changpeng “CZ” Zhao.

In a tweet, CZ drew attention to Binance USD (BUSD), the Binance-branded stablecoin issued by Paxos. The Binance CEO said that BUSD, a fully regulated stablecoin, was “capped” by the New York Department of Financial Services (NYDFS) at $23 billion and currently sits at a $5 billion market cap, and since then, USDT has seen tremendous growth.

BUSD, a fully regulated stablecoin, was “capped” (no new minting) by NYDFS at $23b. Now at $5b market cap. Since then, USDT has seen tremendous growth.

— CZ Binance (@cz_binance) June 1, 2023

In February, the NYDFS ordered Paxos to stop any new issuance of BUSD, citing violations of security laws.

While USDT has reached an ATH market cap, its competitors, such as Circle-issued USD Coin (USDC) and BUSD, are struggling to maintain their market share. The second-largest stablecoin, USDC’s market cap stands at $28.8 billion, a difference of over $50 billion to USDT. For context, at one point, USDC’s market dominance was nearing that of USDT, with its market cap reaching an ATH of $55.8 billion in June 2022.

The prolonged bear market of 2022 took its toll on both stablecoins, with declines in their market caps after the June 2022 highs. However, USDT has managed to bounce back with higher market dominance, while USDC’s market cap has been cut almost in half.

Related: Are stablecoins securities? Well, it’s not so simple, say lawyers

The main reason for the decline in the market share of other stablecoins can be attributed to regulatory scrutiny by United States regulators and the U.S. banking crisis. After a ban on new minting of BUSD for security violations, its market cap dropped rapidly as users started to convert their BUSD to other stablecoins.

Similarly, for USDC, the major crisis came from the Silicon Valley Bank collapse, where the stablecoin issuer held about $3.3 billion in reserves. This led to market panic and a subsequent depegging from the U.S. dollar. Although USDC regained its peg the next day, it took a significant toll on its market cap, with many users converting their USDC to other stablecoins in fear of a total crash.

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