Tether: Trading Volume Surpasses Largest Payment Networks
Tether (USDT) processed $18.2 trillion in transactions in 2022, outpacing traditional payment processors like Visa and Mastercard, according to a January 14 Twitter message.
By comparison, Mastercard and Visa have processed $14.1 trillion and $7.7 trillion worth of transactions, respectively.
Tether’s high transaction volume attests to the massive growth of stablecoins in recent years. Despite the challenges faced by the crypto industry, stablecoins seem to have flourished. Their adoption has grown in countries where the current economic situation has put their national fiat currency at a disadvantage.
2022 Settlement Volume pic.twitter.com/k87FrknKr4
— Tether (@Tether_to) January 14, 2023
2022 was a challenging year for Tether
Despite the growing adoption of stablecoins in 2022, Tether had a somewhat difficult year.
Last year saw more concerns about its reserves and solvency after the collapse of Terra (UST) in May and the FTX crypto exchange in November.
The stablecoin briefly lost its peg to the US dollar in the midst of the Terra crash and the FUD generated by it. During this period, the stablecoin issuer witnessed over $10 billion in redemptions. Later, several mainstream financial institutions placed short positions against USDT due to speculation surrounding its financial health.
USDT’s market capitalisation declined
Although USDT remains the largest stablecoin in the crypto market, competitors such as USDC and BUSD have recorded wins against it in 2022. For context, Tether’s market cap has fallen from a peak of $83.13 billion to just $65.31 billion over the period. On the other hand, USDC’s market cap rose to $56 billion before falling.
During this period, centralized crypto exchanges like Coinbase urged their users to convert their USDT holdings into USDC. Crypto.com recently removed USDT from its platform for its Canadian users, citing regulatory compliance measures.
Glassnode data showed that by the end of 2022, USDC remittance volumes exceeded those of USDT by almost five times. USDC adoption has increased because investors believe it is a safer option than USDT.
USDC’s assets are backed by cash or short-term U.S. treasuries, and the global accounting firm Grant Thornton has conducted an audit. On the other hand, Tether has not been very transparent or forthright about its reserves.
These issues have led some members of the crypto community to question Tether’s figures for its 2022 trading volume. Some attributed the metrics to so-called wash trading, while others demanded that the stablecoin issuer publish its reserves.