We are still in very important times for blockchain technology and cryptocurrencies, however, we have to look at the big picture, in which we can say that Bitcoin is the flagship of this 2024, however, stablecoins are also an important crypto asset that balances this ecosystem. From any point of view, based on centralisation or decentralisation, stablecoins are an important part of the market and greatly influence the appreciation of cryptos, and institutional investors may be looking at this asset class in the same way.
This has been a week in which two of these types of assets in the crypto ecosystem have found themselves under the spotlight, not only from the community, but also from the US government and most likely from the eyes of those investors who are beginning to believe in a tokenised future.
Here's some news not to miss about stablecoins:
TrueUSD (TUSD)
One of the most shocking news is around the stablecoin called TrueUSD (TUSD) has lost parity over the US dollar reaching a price of 0.9841, with the USDT pair Binance chart, this is a currency in which it gets the value 1:1 with the dollar through attestations in real time, that is, it is observed in real time the reserves and deposits in dollars that are in different US banks. According to the Cointelegraph website, there has been a failure to report these attestations, which may initially cause panic among TUSD holders, given the possibility that there may not be enough dollar reserves for customers who decide to make withdrawals in the short term.
Cointelegraph states that the main movement occurred on Binance, when after delays in the attestation information, more than 339 million dollars of TUSD were sold, making an imbalance between supply and demand, consequently, what a stable high volume currency fears the most, losing the 1:1 parity with the dollar.
TradingView Screenshot
According to the data, it was even impossible to make deposits or withdrawals from exchanges such as Poloniex, in panic attempts are made to contain those who demand their withdrawals. Although it seeks stability, it is a move that in the end investors do not like very much, especially when they begin to lose confidence in the system that supports the stablecoin.
One of the aspects that attracts the attention of investors is precisely that the stablecoins maintain their function, although as they are centrally backed, they can have very stressful situations that come from the lack of information for their holders, people who naturally choose to think that the reserves are simply not enough to cope with a "bank run".
Tether (USDT) VS. UN
Another of those important news surrounding the most famous stablecoin, Tether (USDT) that although it has not lowered its price, we have known that great persecution of the issuing company Tether Limited by regulators in the United States and beyond, up to the UN itself.
This time it is Tether Limited who decides to respond forcefully to the accusations that the asset (USDT) is used for illicit businesses such as drugs, underground banking and organised crime, the issuing company has mentioned the various collaborations that its network has made against illicit acts that are linked to USDT, mentioning the millions of dollars blocked to traced accounts and linked to illicit acts.
Tether has mentioned the company's willingness to strengthen ties with government and international institutions, mentioning that its centralised system can help track funds to clear the name of cryptoassets from that point of view.
Another advantage mentioned by this company, is the use of its cryptocurrency in developing countries, due to its direct 1:1 linkage it is widely used in countries that may have recession and inflation.
Despite its arguments, Tether has a long way to go in governmental spheres, because possibly in the future the North American country will develop a CBDC using blockchain technology and it is possible that Tether will be seen as a competition, given this possibility the company issuing USDT must fight in hostile environments such as international courts and show the advantages of its use. However, CBDCs are not very popular in the crypto community due to their centralisation and vulnerability to manipulation by central banks.
Stablecoin laws by 2024?
With cryptocurrencies and institutional investors coming closer together with the Bitcoin ETF, eyes are increasingly on the crypto ecosystem, so it is not unreasonable that these centralised currencies such as Tether (USDT) may have to be subject to new laws.
The CEO of Circle, Jeremy Allaire who runs the USDC issuer has mentioned in an interview for CNBC that laws will be passed this year, due to all the attention Cryptos have garnered and even linking wars like the Middle East and terrorist financing.
Conclusions
Given this news we could speculate about laws that are beginning to be formulated by regulators, this could help the vision of institutional investors, however, regularization and centralization end up being concepts that are not widely accepted by the crypto community, however, it is important to mention that it is necessary for example to know that the coins with reserves in dollars in U.S. banks must have transparency in terms of numbers, in addition to penalties when the information is not sufficiently clear.
Stablecoins are an important part of the ecosystem, at least so far, so it is necessary to be informed about developments in the larger ones.
Thank you for your reading, until next time