Stablecoin wars get bloodier

Stablecoin wars get bloodier

Stablecoins are a crucial part of the crypto ecosystem, which brings liquidity and allows crypto finance and other web3 services to develop smoothly.

It is also a big business: world’s three biggest stablecoin issuers manage a total of $125 billion, for which they charge issuance and redemption fees, and a portion of which they can lend and invest like banks.

The competition in the stablecoin world is fierce and is getting particularly cruel now ⚔️

📍 Tether ($USDT, $69 billion market cap) used to be accused of insufficient reserves, but since the company got rid of shady “commercial papers” last year and hired an auditor, the number of accusations has decreased.

📍 Circle ($USDC, $41 billion market cap) was heavily criticized for its over-enthusiastic reaction to the Treasury adding Tornado Cash-related addresses to the OFAC list: the company was the only stablecoin to simply block the “stained” tokens.

📍 Paxos is a company that issues stablecoins under the name Binance USD ($BUSD, $15 billion market cap).
Binance has deployed a lot of efforts to push BUSD and sometimes even hinder its competitors. Last autumn, the exchange seized the momentum of public outrage on Circle and delisted the USDC from its platform, “in order to improve liquidity”.
Now it’s got problems of its own 😬

Last week, Paxos received a letter from the SEC, and in the following days announced it would stop working with Binance and halt BUSD emissions.
While the details are still unknown, Bloomberg has shared an insight on Circle reportedly denouncing BUSD to the New York Department of Financial Services for not having enough reserves to cover the issued tokens.
The karma is hitting back 😅

How did this affect the market caps?
Since the lows of last year’s bear market (November), $USDC has lost 3%, $BUSD – 33%, while $USDT has gained 6%.

Divide and conquer.