- Stablecoins are surging in popularity and use.
- Tron claims the title of the biggest chain for Tether‘s USDT, surpassing Ethereum.
- Lawmakers are increasingly recognizing the advantages of stablecoins.
Stablecoins have emerged as a cornerstone of the cryptocurrency ecosystem, offering a bridge between volatile digital assets and traditional fiat currencies. These digital tokens were designed to maintain price stability, enhance liquidity, and facilitate seamless entry and exit from positions.
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Tether’s USDT stands out as the undisputed stablecoin leader. Available on 16 blockchains, including Tron, Ethereum, and Solana, USDT has experienced exponential growth in market cap since its inception in 2014. Now, as a testament to the rising popularity of stablecoins, USDT has achieved a remarkable milestone in its daily trading volume on the Tron blockchain alone, surpassing that of VISA.
Tron is the Leading Chain Supporting Tether
Stablecoins are swiftly establishing themselves as a viable alternative to fiat in the global financial system, led by Tether’s USDT. This momentum is clear in USDT’s increasing market cap and transaction volume. Recent figures from Lookonchain highlighted Tron’s role, with daily USDT transactions hitting $53 billion, exceeding VISA’s average daily volume.
Lookonchain reported VISA’s Q1 volume at $3.78 trillion, averaging $42 billion daily over 90 days. Remarkably, Tron’s $53 billion daily USDT volume surpassed this by approximately 20%, underscoring the growing prevalence of stablecoins in global transactions.
Among the many blockchains supporting USDT, Tron has emerged as the largest network, commanding $59.3 billion, or 53.7%, of the token’s market cap as of Q1 2024. In contrast, Ethereum, formerly the dominant chain for USDT, held $50.7 billion, or 45.97%, of USDT’s Q1 market cap.
Tron’s ascent as the top choice for USDT transactions is primarily due to cost. While gas fees vary depending on network congestion, validator availability, and demand, Tron is still a lower-cost and faster blockchain than Ethereum.
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However, Tron’s average transaction fee has skyrocketed since February 2023 to around $0.90, which is not much cheaper than Ethereum’s current $1.044 average transaction fee.
Governments increasingly acknowledge the need to address their growing influence as stablecoin usage expands.
Stablecoin Legislation Being Worked On
Stablecoins are gaining recognition as legitimate payment methods, prompting jurisdictions worldwide to introduce legislation to accept them. As these digital assets expand in popularity, governments are crafting frameworks to support stablecoin use while upholding financial integrity.
In the U.S., a significant step towards stablecoin regulation was taken in April when Senators Kirsten Gillibrand and Cynthia Lummis introduced the bipartisan Lummis-Gillibrand Payment Stablecoin Act.
The proposed legislation aims to create a thorough regulatory framework for stablecoins, safeguarding users and reinforcing the dollar’s prominence in digital assets. It addresses critical aspects like issuance, redemption, and reserve mandates for stablecoin providers. The bill is still in its early stages and currently awaits Senate floor debate.
Meanwhile, in the U.K., HM Treasury is advancing its stablecoin plans through Phase 1 of its regulatory strategy, which focuses on issuing, custody, and using stablecoins.
Under these proposed rules, firms involved in UK payment transactions using stablecoins will be required to seek authorization as payment service providers and be subject to supervision by the Financial Conduct Authority.
However, with a general election looming and the ruling Conservative Party widely tipped to lose power, crypto policy remains uncertain under a Labour government.
On the Flipside
- Daily volume is a volatile metric that can swing to extremes from day to day.
- In April, monthly stablecoin volume soared to $1 trillion, a tenfold increase from the $100 billion average in October 2020.
- Singapore finalized its stablecoin legislation “to facilitate the use of stablecoins as a credible digital medium of exchange” in August 2023.
Why This Matters
USDT’s growing volume on TRON, surpassing VISA, signifies a seismic shift in global finance. Stablecoins are increasingly recognized as valuable additions to the global monetary system.
E.U. MiCA rules cast doubt on the viability of non-compliant stablecoins:
Uphold Axes Multiple Stablecoins as MiCA Rattles Exchanges
Bitcoin advocates speculate corporate BTC adoption at Dell:
Bitcoin Fans Go Wild Over Ambiguous Dell Tweet
