Which ‘crypto winter’? Global monthly volume on the chain of stablecoin hits an all-time record
Stablecoins have been thrust into the spotlight over their various uses and role in the ongoing crypto market crash. The evolution of stablecoins in the cryptocurrency community is underscored by volume hitting new milestones.
In this case, as of August 2022, the volume of stablecoin on the chain reached almost $1 trillion after registering steady growth over the past two years, data from CoinMetrics indicates.
Increasing stablecoin popularity
The growth is in line with the popularity of stablecoins, characterized by increasing global use cases.
Enthusiasm for stablecoins is highlighted by WeTrust platform maintainer Patrick Long, who emphasizes that they stand out due to their years of use.
Initially, the use of stablecoins within the crypto sector was linked to acting as a safe haven in cases of increased volatility. However, the use cases have since multiplied, especially with the growing popularity of decentralized finance (DeFi) applications.
Along these lines, several cryptocurrency firms have increasingly focused on embracing stablecoins in an attempt to control the highly competitive market. For example, cryptocurrency exchange Binance has announced plans to remove access to three stablecoins competing with its own, called Binance USD (BUSD).
From September 29, the exchange will automatically convert users’ holdings of USD coins (USDC), Pax dollars (USDP) and trueUSD (TUSD) to BUSD.
At the same time, various jurisdictions have raised concerns about the financial risk posed by stablecoins. Concerns were accelerated with the Terra (LUNA) ecosystem crash that was triggered after the platform’s stablecoin TerraClassicUSD lost its dollar peg.
Concerns about stablecoin popularity
Most of the concerns have been due to the private nature of stablecoins considering that the Terra ecosystem crash has been linked to mismanagement by company officials. In particular, an investigation is ongoing into the allegations of fraud in the collapse.
It is worth mentioning that some of the early stablecoin regulatory initiatives have seen US states such as New York issue specific regulations targeting the sector.
At the same time, other jurisdictions are exploring the use of stablecoins to drive transactions. As reported by Finbold, the Russian Ministry of Finance (Minfin) announced that it was ready to support the legality of transactions in the country through stablecoins.
According to Russian government officials, using stablecoins minimizes risk and works better than traditional settlement transactions.
Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.
