Tether’s 10 years with meteoric growth, ties to US, European hurdles

Tether marked its first 10 years amid a considerable expansion in its user base. According to the stablecoin issuer, it had 350 million users on Oct. 7, an increase of 148% from its 141 million users in 2022. 

Tether’s USDT (USDT) rapid growth over the past two years can be partially attributed to a tighter regulatory landscape in the United States, which has put pressure on domestic crypto companies since the FTX debacle in November 2022. 

Increased scrutiny by regulators, combined with the 2023 banking crisis that led to the temporary depegging of its primary competitor, USD Coin (USDC), drove many users to move their assets away from US-based platforms amid concerns over regulatory risks and the stability of the financial system. Even though market conditions have evolved since then, Tether has successfully retained a significant portion of these users. 

The company has also changed its approach toward authorities. In 2022, for instance, Tether refused to proactively freeze wallets allegedly associated with irregular activities such as terrorism financing. Over a year later, in December 2023, it disclosed onboarding the Federal Bureau of Investigation (FBI) to its platform, claiming to be “a world-class partner” to US law enforcement. 

Another noteworthy development was the appointment of Paolo Ardoino as the new CEO. In the company since 2017, Ardoino also tweaked his tune on social media about Tether’s compliance and collaboration with authorities since ascending as the company’s top executive.

The results are seen in Tether’s market share. At the time of writing, USDT had almost 70% dominance among stablecoins, with about $120 billion in market capitalization. This performance, however, now faces new regulatory hurdles — this time in Europe. 

A second phase of new rules for stablecoins set for implementation in December 2024 by the Markets in Crypto-Assets Regulation (MiCA) has prompted some platforms to delist USDT and other stablecoins over the past few months. Ardoino has previously criticized the new guidelines, citing challenges such as finding partners to meet requirements such as having assets deposited in several banks.

Tether’s asset reserves are largely backed by US Treasurys, which has boosted its revenue under the current interest rates. In the first half of 2024, the company posted a record-breaking profit of $5.2 billion. However, the Federal Reserve’s dovish stance is expected to impact this income in the coming months.

This week’s Crypto Biz also explores Canary’s filing for an XRP ETF, Wirex’s non-custodial payment services, VanEck’s new venture fund, and Hong Kong’s move to issue crypto licenses for exchanges. 

Canary Capital follows Bitwise in filing for spot XRP ETF

Canary Capital filed for a spot XRP exchange-traded fund (ETF) with the US Securities and Exchange Commission on Oct. 8, following Bitwise’s similar filing a week earlier. The ETF aims to provide investors with direct exposure to XRP without the need to hold the asset themselves, using the CME CF Ripple index to track XRP’s price. If the Canary Capital or Bitwise applications are approved by the SEC, it would be the first spot XRP fund approved by the regulator, though significant hurdles remain due to ongoing legal issues involving XRP.

Wirex Pay launches non-custodial crypto payments

Web3 money app Wirex announced its modular chain specifically designed for payments. The solution, called Wirex Pay, offers a non-custodial crypto payment app aimed at enhancing security and user control over funds. The app will enable crypto payments via private keys and multisignature methods, supporting stablecoins like Tether (USDT), USD Coin (USDC) and Dai (DAI) in 54 countries, excluding the US. According to the company, users must complete a setup process to use the app, including card order and Know Your Customer verification.

VanEck launches $30M ventures fund for crypto and AI

VanEck has launched a $30 million fund called VanEck Ventures to invest in early-stage fintech, crypto, and AI startups. Led by former Circle Ventures executives Wyatt Lonergan and Juan Lopez, the fund will focus on projects related to stablecoins, tokenized assets and digital marketplaces. According to Lonergan, VanEck Ventures’ focus on stablecoin projects is relevant because stablecoins will emerge as an “open-source banking layer.” The fund will target 25-35 investments, ranging from $500,000 to $1 million each.

Hong Kong to license more crypto exchanges by end of year

Hong Kong’s financial regulator, the Securities Futures Commission (SFC), says it expects to issue more licenses to crypto exchanges and digital asset firms operating in the region by the end of the year. SFC CEO Julia Leung said she expects it to “make progress” in issuing licenses to 11 currently operating Virtual Asset Trading Platforms (VATPs) on the regulator’s list of potential licensees. A total of 16 companies are awaiting decisions on their VATP applications, and 11 are already operating as “deemed to be licensed.”

Before you go: A European Central Bank (ECB) official has introduced the idea of a “European ledger” — a continental, unified ledger — that could bring European digital assets and money together in one place, leading to greater efficiency and synergy. 

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