This year it is pretty safe to say that stablecoins are going to have an interesting time. The US Congress is pretty united on the fact that these stablecoins that are pegging themselves to the US Dollar need to have the assets/reserves to back that up. After all, the US Dollar is central to the government and the world overall as the world reserve currency. Personally, though I think the biggest issue that stablecoins face boils down to the name stablecoins when many trade within a range albeit a narrow one but still a range.
Depegging events have been a pretty frequent issue over the last year and have led to the collapse of whole ecosystems like TerraLuna. One of the net results of this has been the so-called "stablecoin wars" in which different crypto exchanges and companies backing the coins themselves have made harmful comments about others trying to push theirs as the creme de la creme of the bunch. Examples of this are wide-ranging. It started with the publishing of reserves to show that they had the money they claimed with Tether (USDT) publishing theirs and then Circle the company behind USDC publishing theirs and pointing out the differences in the reserve make-ups. More recently you have seen Binance "delist" in a way USDC as they convert the USDC to BUSD, BUSD is Binance and Paxos's own centralized stablecoin. That was followed up with Coinbase waiving the $0.99 fee to convert from other stablecoins to USDC.
In December though a new twist occurred and that was Bianace was getting absolutely drained from its BUSD stablecoin reserves with over $5.5 billion alone. Was part of this caused by market panic with the FTX fallout maybe a little bit but it was Binances auditor Mazars report and subsequent pause of work that really rocked Binance. Binance's decision to convert USDC to BUSD served as a double-edged sword as when people withdrew in stablecoins they (Binance) had to pay out in either USDC or USDT which propped up the rivals and depressed their stablecoin.
The result of this was BUSD's market cap falling to $16.4 billion from $22.1 billion. Industry leader USDT increased about $800 million to $66.3 billion and second place USDC grew by ~$ 1 billion to $65.5 billion. It is safe to assume that this is not what Binance had anticipated when they initially made the choice to have people convert to their crypto as outflows of that level are unsustainable month over month. How these next few months will be really interesting to follow if Binance is able to stabilize its outflows faith will help be restored but if not then they are in trouble. Personally, I cannot imagine the world without Binance right now as I do think it does serve a purpose at least right now since the industry is increasingly becoming more fractured.
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