In its latest edition of the Stablecoins & CBDCs Report, CCData observed that the stablecoin market shrunk for the 14th consecutive month in May. The digital asset data provider’s Stablecoins report summary highlighted a decline in the niche’s total market capital to $130 billion. The market dominance increased slightly month over month to 11.1% but remained below its all-time high of 16.6% recorded last December. Meanwhile, the traded volume tumbled by 40.6% in May to $460 billion – the lowest level this year.
Here’s a broader assessment of the stablecoin market and the latest updates from stablecoin issuers.
Circle’s USDC stablecoin is coming to Arbitrum this week
Peer-to-peer payments tech firm Circle, last week, revealed plans to launch USD coin (USDC) on Arbitrum. Set for release on June 8, the iteration of the stablecoin offering will seamlessly integrate with the layer two protocol as a ‘native’ asset. The forthcoming launch will effectively represent the official version of USDC on Arbitrum and replace liquidity previously availed through the bridged version. The Circle-issued token holds a market capital of $28.6 billion and ranks second among stablecoins with the largest market capital per CoinMarketCap data.
Native USDC for a smoother experience for institutional on and off-ramps
Presently, all USDC tokens on Arbitrum are bridged from Ethereum. To distinguish between versions, the older Ethereum-bridged variant will be identified as USDC.e on Arbitrum’s block explorers, eventually making way for the newly introduced native version. The adoption of native USDC brings several benefits, including advanced support to mitigate bridge withdrawal delays and facilitate institutional on and off-ramps. Circle also said it plans to introduce the cross-chain transfer protocol on the scaling solution, enabling swift transfers between the Arbitrum and Ethereum networks.
USDC market capital. Source: TradingView
For smooth and seamless transfer of liquidity, the Ethereum layer will collaborate closely with ecosystem applications. The launch will not bring interruptions or yield immediate changes to the bridge. Arbitrum joins the ranks of leading blockchains, including Ethereum, Solana, Avalanche, TRON, Algorand, Stellar, Flow, and Hedera, with native USDC. Currently, most of USDC’s substantial $28.9 billion market capitalization exists on Arbitrum’s base layer amounting to $27.3 billion.
To learn more about these projects, visit our Ethereum and Arbitrum guides.
Circle shifts all its reserves to cash and repurchase agreements
Circle recently adjusted its reserves treasury to mitigate the risks associated with a potential default on US debts at the time. The USD coin issuer reallocated the reserves backing its USDC to short-dated US Treasuries last month. CEO Jeremy Allaire explained that the company chose to eliminate Treasuries maturing beyond early June to minimize exposure to debt.
In the same vein, Circle has now entirely divested itself of US Treasury bonds. The Circle Reserve Fund, overseen by BlackRock, held its billions worth of AUM in repo agreements as of the end of last month. A sign of significant change, as of the end of April, the fund held over $30 billion in Treasury bonds, but the last Treasury bond it held reached maturity.
Cementing its presence in Singapore
The Singapore-serving affiliate of Circle today communicated it received approval to become a digital payment token services provider in the Southeast Asian city-state. Circle Singapore confirmed in a June 7 press release it won a Major Payment Institution (MPI) license from the country’s integrated financial regulator. In addition to digital payment token services, the license awarded by the Monetary Authority of Singapore allows the stablecoin issuer to offer money transfer services both domestically and across the border.
“Circle Singapore’s receipt of the MPI license from MAS underscores Circle’s strong reputation as a responsible digital financial technology company […] It is a testament to Circle’s track record and contributions to the emerging internet-based global financial system, further cementing its position as a trusted and well-regulated operator,” the company statement read.
The strategic move represents Circle’s efforts to spur innovation while delivering a comprehensive offering with value to clients and stakeholders in the greater Asia region. Remarking on the milestone, CEO Jeremy Allaire and Head of Global Policy Dante Disparte hailed Singapore as a progressive and favorable hub in the financial space. Circle previously received in-principle approval in November 2022, a month after the MAS tabled new crypto regulations requiring stablecoin issuers to meet capital and reserve requirements. Prior to its official opening last month, Circle Singapore teamed up with Tribe, a government-backed blockchain ecosystem builder, for an awareness and support program.
To learn more about USDC, check out our Investing in USD Coin guide.
Tether ventures into sustainable bitcoin mining
Circle rival and USDT issuer Tether has equally been diversifying its operations and earlier this week took part in a public-private partnership in El Salvador. Tether is part of the companies that pledged to inject $1 billion into creating a Bitcoin mining site that will be run by a local startup Volcano Energy. In a Wednesday update, Volcano Energy chairman Max Keiser confirmed the release of the first $250 million investment to fund a 241-megawatts (MW) power generation park – 72 MW of wind energy and the rest from photovoltaic solar energy – in the Metapán, Santa Ana region.
Mining difficulty and network hashrate. Source: BTC.com
Tether didn’t disclose its size of the investment but projected the computing power of the mine to be above 1.3 exahashes per second (EH/s) which, if realized, would rank the operation’s mining hash rate among the top 20 pools.
South America’s appeal
Last week, USDT issuer Tether announced it had followed up on its promise to redirect part of its profits into buying Bitcoin and investing in the leading digital asset’s infrastructure, aiming to capitalize on its potential growth. The plan kicked off with an expansion into Bitcoin mining operations in Uruguay. Per the official press release, the company is partnering with a local licensed company and engaging local energy experts to launch leverage the country’s abundant green energy sources and launch this ambitious initiative.
In its Q1 2023 report card, the company revealed there was already some $1.5 billion in Bitcoin held in reserve and committed to allocating 15% of its net realized operating profits to buying Bitcoin. The South American country currently meets more than 90% of its electricity need by drawing from renewable sources. Tether’s Chief Technology Officer, Paolo Ardoino, spoke of the significance of this venture, noting that the country’s renewable energy capabilities could help the firm become an industry leader in “sustainable and responsible” mining activity.
The timing of Tether’s foray into Bitcoin mining aligns with a rise in difficulty levels as May came to an end. Tether further explained that the South American nation is a strategic fit due to its natural resources, such as wind farms, solar parks, and hydropower, which offer a favorable environment for a dependable supply of renewable energy projects. The USDC issuer anticipates that the mining facility will be up and running by mid-Q3 this year.
Check out more PoW Mining news here
Nearly two-thirds of all USDT is now on the Tron blockchain
USDT tokens issued on the Tron blockchain jumped to yet another record high on the last day of May, hitting $46.12 billion – more than 60% of the circulating supply of the Tether tokens. This significant milestone coincided with the fifth anniversary of the Tron mainnet, further widening the gap between the stablecoin’s supply on Tron and Ethereum to nearly $10 billion worth.
TRX/USD chart
Tron has processed a staggering 5.6 billion transactions and currently boasts a total value locked of $5.56 billion according to its developers. Tron founder Justin Sun has set some lofty goals for 2023, aiming to elevate the on-chain stablecoin market capitalization of the network to an impressive $100 billion. With the intent to position itself as a more cost-effective and user-friendly alternative to Ethereum, Tron seeks to establish itself as the preferred choice among stablecoin users.
To learn more about Tron, check out our Investing in Tron guide.
Tether increases its foothold in Georgia via collaboration with payments processing firm
In a previous May 31 communication, Tether announced that it had expanded its foothold in Georgia through a strategic investment in CityPay.io, a prominent payment processing firm operating across an extensive network of 600 locations countrywide. Tether seeks to introduce heightened efficiency and convenience to the payment industry within Georgia by empowering the firm to expand its operations and enhance its service offerings.
Georgia is currently seeing an explosion in interest in crypto, with a notable surge in demand for crypto payment alternatives. Tether’s investment in CityPay.io constitutes the initial stride in its concerted efforts to establish a robust presence within the Georgian market. The company reaffirmed its steadfast commitment to introducing groundbreaking innovations and operational efficiency within the payment industry in the state.
Tether (USDT) market cap surges again to beat May 2022 all-time high
Tether also controversially reported on June 1 that its USDT offering’s market capital has surpassed the previous all-time high of $83.2 billion, a record set during the bullish market phase in May 2022. The continued growth in USDT’s market cap during the bear cycle has raised eyebrows among crypto enthusiasts. Tether explained that the increasing market capital is a sign of the growing demand for stablecoin while maintaining a cautious approach in dealing with regulatory bodies.
USDT market capital
The transparency data for June reveals Tether’s total assets amounting to $85.6 billion, with liabilities standing at $83.2 billion, providing a liquidity cushion of $2.4 billion. CTO Ardoino noted that the demand for Tether stems from individuals yearning for financial autonomy, as well as the assurance it provides to the unbanked population. He also underscored the company’s unwavering strength in the face of market volatility and its unwavering commitment to unmatched transparency, both of which have solidified customer trust. Tether said it remains committed to its goal of providing access to financial freedom on a global scale, especially in emerging markets.
To learn more about USDT, check out our Investing in Tether guide.
Stablecoins are practically the vehicles of liquidity in the digital assets space and as such, a diminishing market cap and monthly trading volume of a similar trend are signs that the bear cycle is still prevailing. JPMorgan analysts opined in a note to clients that until the slump comes to a halt, the road would remain rocky for the potential recovery of the crypto market.
