Tether’s Record $4.5 Billion Q1 Profit Highlights Its Dominance of the Stablecoin Industry

Tether’s record profits come as the US stablecoin issuer tracks new stablecoin regulation legislation passing through Congress.

Tether’s flagship cryptocurrency, USDT, has a market capitalization of $110 billion at the time of writing, up 20% from $91.7 billion at the beginning of the year.

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Posted May 2, 2024 at 12:47 PM ET.

Stablecoin experts say Tether’s record first-quarter profits are an indicator of the company’s continued dominance, and that the stablecoin issuer maintains pole position as regulatory action increases. It states that

Although Tether posted a profit of $4.52 billion in the first quarter, much of it from gains on its Bitcoin and gold holdings, some industry watchers said the USDT currency, Tether’s flagship currency, We believe that table coins still have room to operate. U.S.-based competitors are keeping an eye on the latest stablecoin legislation moving through Congress, but as an offshore entity focused on emerging markets, Tether may be partially immune to these concerns. There is sex.

If Congress passes the current version of the stablecoin bill, which imposes new restrictions on newly regulated issuers, it could go some way to strengthening Tether’s dominance and market share.

Austin Campbell, former chief risk officer at stablecoin issuer Paxos, said, “Tether has a virtual monopoly in the crypto industry today, and the reason is that regulators are trying to compete with Tether.” “Because it has disabled people and slowed them down.” Tether rival and current adjunct professor at Columbia Business School said this in a conversation with Unchained.

Tether’s first quarter profit margin increased by a whopping 58% compared to the previous quarter, when the company posted a profit of $2.85 billion. report. This rise coincided with an increase in the price and trading volume of cryptocurrencies.

Tether did not respond to requests for comment for this article.

read more: Tether expands beyond stablecoins with four new divisions

Tether Skirts Rising to the Top in US

Tether’s earnings announcement came about a week after the market capitalization of its flagship product, USDT, exceeded $110 billion, up 20% from $91.7 billion at the beginning of the year.

Circle, the second largest stablecoin provider, has seen the market capitalization of its flagship stablecoin USDC decline significantly from a high of $55 billion in July 2022 to $33 billion at the time of writing.

Tether’s rise as a leader in the stablecoin industry, which accounts for nearly 70% of the total stablecoin market, can be partially attributed to the company’s decision not to set up shop in the U.S., according to CoinGecko. There is.

Campbell said that by not dealing with regulatory jurisdictions like the United States, Tether is free to operate as it wishes. “Regulators were their own worst enemy.” [insofar as] By their actions, they inadvertently gave Tether a monopoly,” Campbell said.

As an example, the New York Department of Financial Services last year ordered Paxos to stop issuing the BUSD stablecoin, Campbell said.

read more: Regulated dollar stablecoin created by new Senate bill could be crypto’s ultimate Trojan horse

Nick Van Eck, co-founder of stablecoin startup Agora, predicts that Tether will continue to be a strong player in stablecoins.

“Tether has built a great business. They’ve done a lot of things well operationally over the years,” Van Eck told Unchained. “It built his decade of trust and network effects and liquidity that continues to pay dividends.”

“[Tether is] We are in a great position to continue to be the market leader in this space, and I don’t see that changing in the near future or someone taking our place in the next 12 to 24 months,” Van Eck said. added.

Potential impact of new stablecoin law on Tether

Tether’s earnings report comes less than a month after it was introduced by Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.). invoice Provide “effective regulation of payment stablecoins”.

The new law aims to encourage the growth of regulated companies in the stablecoin industry. But Tether’s focus isn’t on the U.S. market.

“Regardless of the law, Tether will continue to grow its balance.” [assets under management]” Van Eck said. “I don’t think there will be a significant impact on Tether’s market share in the first six to 12 months or even 24 months.”

read more: Tether, the multi-billion dollar stablecoin at the heart of the crypto ecosystem

Campbell told Unchained that the current bill could actually strengthen Tether’s advantage due to “technical flaws” in the bill, such as the omission of overnight reverse repurchase agreements. . Such contracts help new entrants maintain liquidity while eliminating counterparty credit risk.

If these flaws are not resolved, they could help Tether remain the stablecoin leader, Campbell said.



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