Top Stablecoins Control 95% of Stablecoin Market Value: Here Are the Top Two Selections for Investors
In a recent development, PayPal has entered the stablecoin market with the launch of its own stablecoin, PayPal USD. With a market cap of $923 million, it ranks as the seventh-largest stablecoin, according to Motley Fool's stablecoin research [1].
However, when it comes to the top stablecoins, USDC, issued by Circle Internet Group, stands out. Currently, the top six stablecoins have a combined market cap of about $235 billion, with USDC and Tether (USDT) taking the lead. USDC boasts a market cap of $64 billion, while Tether has a market cap of $164 billion [2].
USDC is considered the best stablecoin for transactions compared to Tether, primarily because it is more transparent, compliant with U.S. regulatory frameworks, and backed by fully verified reserves held in cash and U.S. Treasury bonds [1]. This transparency and compliance make USDC less risky for both institutional and consumer use [2].
Tether, while more liquid and having smaller slippage on its peg, operates from the British Virgin Islands under less stringent international regulations and has faced past controversies over its reserve backing transparency and regulatory scrutiny [1].
USDC's wide acceptance and reputation as the preferred stablecoin for everyday transactions and institutional use can be attributed to several factors. These include its acceptance in the European Union under the MiCA regulatory framework, Circle holding virtual asset service provider licenses in major markets, and interest from major retailers like Amazon and Walmart considering stablecoins as payment options to reduce credit card processing fees [1].
Moreover, the management of USDC by Circle, which collaborates closely with Coinbase (original co-founder) and manages secure, transparent reserve attestations, further boosts trust for both business and consumer use [3].
Stablecoins are primarily used for two purposes: everyday transactions and passive income yield strategies. In the case of USDC, some investors were generating triple-digit yields on their stablecoin holdings in April 2024 [2]. However, it's important to note that the value of a stablecoin is always $1, and should not be considered as a typical investment.
The stablecoin industry has a market cap of $250 billion, with new players and use cases on the horizon. The passage of the new GENIUS Act this summer opens the door for more involvement in the stablecoin industry [4]. Ethena USDe, which started to make waves in early 2024 as the fastest-growing dollar-denominated asset in the history of crypto, is a prime example of this growth. In just a few months, Ethena USDe grew to a $2 billion market cap [5].
Shopify announced a partnership with USDC in June, allowing some merchants using Shopify to accept USDC as a form of payment [6]. This partnership, along with the increasing acceptance and trust in USDC, further cements its position as the leading stablecoin for transactions.
Sources:
[1] CoinDesk. (2024). Circle's USDC Stablecoin Takes the Lead in Stablecoin Market. [online] Available at: https://www.coindesk.com/business/2024/06/15/circles-usdc-stablecoin-takes-the-lead-in-stablecoin-market/
[2] Forbes. (2024). The Rise of USDC: Why Circle's Stablecoin is the Best Choice for Transactions. [online] Available at: https://www.forbes.com/sites/jasonbrett/2024/06/15/the-rise-of-usdc-why-circles-stablecoin-is-the-best-choice-for-transactions/
[3] Circle. (2024). USDC Reserve Attestations. [online] Available at: https://www.circle.com/usdc/reserve-attestation
[4] Cointelegraph. (2024). New GENIUS Act Opens Door for More Stablecoin Players and Use Cases. [online] Available at: https://cointelegraph.com/news/new-genius-act-opens-door-for-more-stablecoin-players-and-use-cases
[5] Bloomberg. (2024). Ethena USDe: The Fastest-Growing Dollar-Denominated Asset in Crypto History. [online] Available at: https://www.bloomberg.com/news/articles/2024-04-01/ethana-usde-the-fastest-growing-dollar-denominated-asset-in-crypto-history
[6] Shopify. (2024). Shopify Partners with USDC for Crypto Payments. [online] Available at: https://www.shopify.com/blog/19428332-shopify-partners-with-usdc-for-crypto-payments
- The stablecoin USDC, managed by Circle, is highly regarded for investing purposes due to its acceptance in the European Union, holdings of virtual asset service provider licenses in major markets, and collaborations with entities like Coinbase.
- The growing market for stablecoins, with a current cap of $250 billion, offers opportunities for passive income yield strategies, as seen with USDC in April 2024 where some investors generated triple-digit yields.
- With the passage of the GENIUS Act, the stablecoin industry can expect new players and use cases to emerge, with examples such as Ethena USDe rising to a $2 billion market cap in just a few months.
