Tether (USDT), the most significant stablecoin, has achieved a momentous milestone by exceeding a market capitalization of $100 billion. This accomplishment solidifies Tether’s position as the leading stablecoin, nearly quadrupling the size of its closest competitor, USDC.
The $100 billion valuation places USDT well ahead of historically significant funds, such as the $65 billion Reserve Primary Fund, known for breaking the buck during the financial crisis.
Tether, founded in 2014, witnessed a slow initial growth phase but embarked on a remarkable journey to reach its current $100 billion market cap. Initially known as Realcoin, the stablecoin underwent a rebranding in September 2014 when Tether Holdings Limited was established in the British Virgin Islands. The first USDT was issued on the Mastercoin blockchain layer, later renamed Omni.
The stablecoin’s ascent faced challenges in early 2017 when Tether and Bitfinex lost access to several banking partners due to Wells Fargo discontinuing correspondent banking services. Despite structural challenges and legal scrutiny, Tether’s market capitalization surged from less than $10 million in early 2017 to $1.8 billion by November 27, 2018.
During this period, Tether faced lawsuits from the New York Attorney General (NYAG) and the Commodity Futures Trading Commission (CFTC). Revelations from these legal actions indicated that Tether relied on receivables from Bitfinex and other entities, raising questions about the stablecoin’s backing.
Tether’s growth was further fueled by strategic relationships and collaborations. Bahamas-based Deltec Bank and Trust emerged as a crucial banking partner, contributing to Tether’s stability. Notably, Tether’s clientele extended to prominent trading firms such as Cumberland Global and Alameda Research, reinforcing its role in the cryptocurrency ecosystem.
The stablecoin also diversified its investments, participating in various sectors like energy, artificial intelligence, bitcoin mining, payment solutions, and staking. However, Tether faced accusations of orchestrating ‘bailouts’ for struggling firms, adding complexity to its regulatory landscape.
Regulatory scrutiny intensified in April 2019 when the NYAG filed a lawsuit against Bitfinex and Tether, revealing related party transactions. Subsequent settlements with the NYAG and the CFTC failed to diminish regulatory attention, with ongoing concerns about Tether’s reserves and transparency.
Despite regulatory challenges, Tether has consistently expanded its market presence and recently celebrated surpassing $100 billion in market capitalization. While uncertainties linger about its future, Tether’s journey from a modest beginning to a $100 billion valuation underscores its enduring significance in the stablecoin landscape.