New research from CryptoCompare has found for the first time, Tether’s grip on the stablecoin market is starting to slip as six months of bad publicity starts to take effect.
According to data in CryptoCompare’s monthly Exchange Review for December, two competitors to Tether (USDT) have made small inroads into its dominant position in Bitcoin trading. From near-enough 100% of the market in October 2018, USDT has slipped to 98% of market share with two contenders vying for second place:
This is despite Tether long being the subject of controversy. In November 2018, in response to concerns about its viability, Tether went as far as publishing a letter from Deltec Bank apparently showing its reserve balance. Exchanges have even indicated their wish to move away from USDT, with Binance announcing plans to offer a basket of stable coins in its place.
CryptoCompare analysis found the biggest competitor to USDT is Paxos Standard (PAX), an Ethereum ERC20-based stablecoin, backed 1:1 by the U.S. dollar. It secured regulatory approval from the New York State Department of Financial Services (NYDFS) in September and according to CryptoCompare, USDT trading into PAX has increased 70% month-on-month.
It may be that Binance is responsible for much of the increase, as they opened up access to PAX:
Adding more PAX (regulated stable coin) pairs and options. If you are worried about USDT, learn about PAX. https://t.co/qwk4Aoguwh
— CZ Binance (@cz_binance) October 7, 2018
The second contender is USD Coin (USDC). This stablecoin was launched in October 2018 by U.S.-based cryptocurrency exchanges Circle and Coinbase. Accounting firm Grant Thornton LLP releases monthly statements to verify its dollar backing.
Time will tell if the trickle of trading volumes moving to PAX and USDC become a torrent, and whether any will be true contenders versus Tether.