Tether came under increased assault, lowering the price of one of the most important assets in the global crypto markets well below its $1 peg.
The $80 billion stablecoin, designed to track the value of $1, fell to 95.11 cents at the start of the European trading day on Thursday, according to a CryptoCompare index that tracks trade on major digital asset exchanges. in the world. USDC is now trading at $1.004, gaining 11% in 24 hours.
Crypto traders argue that stablecoins give a secure haven for their funds in between unpredictable cryptocurrency bets. Tether, the world’s largest stablecoin, is critical in supporting crypto market transactions while also providing a link to the regular financial system.
The digital asset market has reacted to Tether’s price slide to more than 3% below its $1 peg. The most popular cryptocurrency, Bitcoin dropped over 7% to $26,250, its lowest level since December 2020.
Tether’s decline comes after TerraUSD, a much smaller stablecoin, completely broke away from its peg against the dollar. Tether, unlike TerraUSD, claims to be backed by a basket of dollar assets. However, his backers declined to provide granular details about his holdings.
The group was hit with a $41 million fine by the US Commodity Futures Trading Commission last year over allegations that it made misleading statements from at least June 2016 to February 2019 on the fact that it had sufficient dollar reserves to back up each of its circulating stable coins.
Regulators have cited stablecoins, which are largely unregulated in most markets, as a risk to financial stability. Earlier this week, the Federal Reserve said that just three stablecoins, Tether, USDCoin, and Binance USD, account for 80% of the $180 billion markets.
USD Coin (USDC) is a stable coin pegged to a ratio of 1:1 with the US dollar. USD Coin, commonly referred to as USDC, was launched in 2018 and is backed by the Centre Consortium (led by Coinbase and Circle). The consortium says its mission is to provide a stable digital currency and create an ecosystem where financial partners, wallets, exchanges, and crypto companies can interact within existing global financial regulations.