The latest price moves in crypto markets in context for April 14, 2023.
This article originally appeared in First Mover, CoinDesk’s daily newsletter putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.
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Ether (ETH) continues to outperform bitcoin (BTC) following the Ethereum network’s Shanghai upgrade, which has proven to be bullish for much of the cryptocurrency market, with many altcoins following suit. Ether is up 6% on the day vs. bitcoin which gained 1%. Bitcoin did briefly cross $31,000 on Friday for the first time since June 2022, marking a 10% gain over the last 7 days. Ether rose 13% over the same time frame. Arbitrum (ARB) an Ethereum scaling solution, led gains this week, rising almost 30%. According to Sheraz Ahmed, STORM’s managing partner, ARB is bouncing back from the overselling caused by its airdrop in March, which saw the Ethereum layer 2 distribute its long-awaited governance token to community members. The airdrop, however, was plagued with bugs and phishing scams. “The crypto markets are heavily emotionally driven, and we often see overbought/sold tokens based on over-reactions,” said Ahmed.
Top 10 protocols with a market capitalization > $1B. (Messari)
The tokenization of real-world assets gathers pace, Bank of America (BAC) said in a research report Thursday, which noted that the tokenized gold market surpassed $1 billion in value last month. Tokenization is the process of putting ownership of tangible assets – precious metals being one example – on the blockchain, and thus offering the convenience of buying and selling these assets around the clock as the involvement of traditional brokers is not necessary. Bank of America sees this tokenization – which could also include commodities, currencies and equities –as a “key driver of digital asset adoption.”
Solana Labs’ crypto-forward smartphone Saga will go on public sale May 8, the company behind the Solana blockchain said Thursday. Pre-ordered devices are shipping now. The Android smartphone is a gamble on mobile being imperative to the future of crypto, employees at Solana-focused companies told CoinDesk. It was nearly 10 months ago that Solana first teased the radical potential of a cellphone that doubled as a dedicated crypto hardware wallet, and the possibilities such a product could hold for its entire ecosystem. The new device from Solana Mobile costs $1,000 and is built on hardware from Bay Area smartphone company OSOM. Phonemaker names both big and small – HTC and Sirin Labs among them – have previously failed in their efforts to create a crypto-forward smartphone, setting an ominous precedent for Solana, a device built for and marketed to a single crypto ecosystem.
Chart of the Day
Source: Refinitiv, The Market Ear newsletter
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The Singapore firm is one of the largest bitcoin miners in the world with 16.2 EH/s of hashrate.
Bitcoin miner Bitdeer listed today on the Nasdaq after several delays, to lukewarm reception, as the shares of the miner, under the ticker BTDR , lost almost 30% of their value, trading around $6.81 at the time of publication.
The stock was halted shortly after market open, several times, for volatility. Other crypto mining stocks saw single-digit upticks in their share value at the same time frame.
Its merger with a special-purpose acquisition vehicle (SPAC), called Blue Safari Group Acquisition Corp, was approved on Tuesday.
The Singapore-based firm is one of the largest miners in the world, shows a March prospectus filed with the U.S. Securities and Exchange Commission. It has six mining sites across Washington state, Texas, Tennessee and Norway, with a total energy capacity of 775 megawatts (MW) as of the end of 2022, about less than what it had estimated in February 2022. Its hashrate or computing power at the end of January stood at a total of 16.2 exahash per second (EH/s), second only to bankrupt Core Scientific (CORZ) and higher than Riot Platforms (RIOT) and Marathon Digital Holdings (MARA).
About one quarter of that is used for self-mining, meaning it keeps the bitcoin rewards, whereas the rest is given out for cloud mining, meaning customers rents its machines and reap the rewards.
Bitdeer was born out of the world’s largest rig manufacturer, Bitmain, when after a spat between the two co-founders, one of them left and took Bitdeer. Another cloud mining firm also affiliated with Bitmain, BitFuFu, is also in the process of going public via SPAC, but has delayed the listing.
Bitdeer’s, along with other bitcoin miners, financial performance deteriorated in 2022, in part due to worsening market conditions. The firm reported revenues of $330.3 million, and a loss of $62.4 million for 2022, compared with $394.7 million in revenue and a profit of $82.6 million the year before, according to the prospectus filing.
The miner is going public at a better time than last year as market conditions have improved, with bitcoin passing the $30,000 mark and mining equities in many cases outperforming the digital asset in percentage growth. In the future the “market will begin to shift from not only focusing on operators with the biggest scale, but also operators with the best unit economics,” said investment bank Stifel Nicolaus’s analyst Bill Papanastasiou.
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The Securities and Exchange Commission is confirming crypto industry worries that, yes, the proposal last year to widen its view of securities exchanges is meant to fold in DeFi.
The U.S. Securities and Exchange Commission (SEC) may be coming for decentralized finance (DeFi) as it considers reopening a proposal from last year that would now explicitly target platforms for those crypto transactions as exchanges that need to be regulated.
The SEC proposed expanding the definition of the word “exchange” in January 2022 to capture a broader swath of trading activity in the U.S. At the time, the agency said in its proposed rulemaking that certain entities engaging in trading activity were not regulated as exchanges, creating a “regulatory disparity.”
The securities agency read last year’s comment letters from the crypto industry calling the initial proposal an overreaching power grab that failed to provide enough clarity about its meaning to be legitimate. The commission is going to vote Friday on what amounts to a response to that criticism. If approved, the updated proposal would use more direct language that includes DeFi in the widening definition of regulated exchanges, and it will detail its estimates on how much that change is expected to cost the industry.
The specific changes will be published after the meeting ends with a vote later today.
SEC Chair Gary Gensler contends that most crypto platforms are already operating as unregistered securities exchanges, with or without the latest tweaks to the definition of what it means to be an exchange. But he and the commission are poised to “reiterate the applicability of existing rules to platforms that trade crypto asset securities, including so-called ‘DeFi’ systems,” according to an SEC fact sheet outlining the changes.
“Calling yourself a DeFi platform is not an excuse to defy the securities laws,” he said in remarks prepared ahead of the meeting.
SEC officials, speaking to reporters ahead of Friday’s meeting, said the reopening and additional information came after a number of market participants asked for more information about the proposed amendments and how exactly they would be applied to crypto assets and DeFi.
The agency isn’t looking to actually define DeFi in the rule, according to SEC officials, but will evaluate each situation by how the activity is being handled, including whether there’s an intermediary and exactly what service that intermediary is providing.
In the prepared remarks, Gensler reiterated his view that “the vast majority of crypto tokens are securities” and that crypto trading platforms already meet existing requirements for securities exchanges.
“These platforms match orders of multiple buyers and sellers of crypto securities using established, non-discretionary methods,” he said. “That’s the definition of an exchange – and today, most crypto trading platforms meet it. That’s the case regardless of whether they call themselves centralized or decentralized.”
Industry pushback
The crypto industry has long advocated for U.S. rules that can bring certainty to how the companies and activities need to operate, though prominent crypto executives and their lobbyists have also said that the SEC’s position that they need to register and follow existing securities laws won’t work for this industry. The SEC has broadly chosen against a tailored approach to the cryptocurrency sector that would acknowledge how it differs from the rest of finance, with Gensler routinely arguing that longstanding securities laws are sufficient.
The SEC had pushed this exchange-definition rule and other proposals last year that – without detailing its intentions with crypto specifically – had suggested that the agency meant to formalize its reach into the digital assets sector.
Later, the agency became more explicit about having its eyes on digital assets, when it issued another proposal in February that could bar investment advisers from keeping assets at crypto firms.
With each proposed rule, the SEC’s walls are closing in on crypto businesses that insist there’s no path for them into regulated finance.
The agency received almost 400 comment letters on this week’s revisited proposal and disclosed 35 staff meetings and calls with Wall Street lobbyists, industry self-regulatory organizations, the Bank of England and others regarding the effort. A reopened comment period would give crypto lawyers and lobbyists another 30 days to argue against the rule before the agency will review those responses and decide whether to approve a final rule.
Even when the new exchange definition didn’t name crypto explicitly, the industry opposed it with the assumption that it had digital assets platforms in mind.
“The proposal fails to adapt to – let alone acknowledge – the fundamentally new ways in which individuals can conduct asset exchanges using DeFi protocols,” the Blockchain Association and the DeFi Education Fund argued in a 2022 letter to the SEC. “Instead, it would improperly apply regulations designed for intermediating exchanges like the New York Stock Exchange to software or software developers.”
Rep. Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee that oversees the SEC, wrote a letter to Gensler with another committee member that said the agency seemed to be trying “to expand the SEC’s jurisdiction beyond its existing statutory authority to regulate market participants in the digital asset ecosystem, including in decentralized finance”
Circle Internet Financial sought the chance to ask for more specific rules for crypto.
“In view of the unique architecture of digital asset markets, we suggest that the commission would benefit the most from a wide-ranging concept release focused on digital assets markets and how best to achieve its policy goals in light of the unique architecture of such markets,” the company’s comment letter suggested.
But some were glad last year at the possibility crypto could be folded into this SEC oversight.
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“The cryptocurrency industry is rapidly expanding with some industry lobbyists insisting that their offerings and platforms fall outside the securities laws and regulations,” Better Markets, a Washington-based group advocating for tougher protections in the financial system, wrote in a comment letter last year. “But clearly, the commission must apply securities regulation equally to all securities regardless of how novel, ‘innovative,’ popular, or profitable such offerings may be.”
It’s been a tough month for DeFi in U.S. policy circles, after the U.S. Treasury Department also made clear last week that DeFi services should be subject to anti-money-laundering laws, saying the platforms have been used by criminals and for terrorist financing.
DWF Labs made headlines with more than $200 million of investments in crypto projects such as CryptoGPT or Synthetix. A closer examination reveals that many of their deals aren’t typical venture capital investments, but packaged with market making services, pledges to boost trading volume or even selling tokens directly for a project’s treasury. Industry experts claim red flags and conflict of interest, but the firm says it’s all a misunderstanding.
The giants of crypto venture capital are mostly a well-known group of firms that’ve been around for years, companies like A16Z, Paradigm, Pantera Capital and Digital Currency Group (CoinDesk’s parent).
So the quick and loud emergence of a firm called DWF Labs as a seemingly large player in the space over the past few months caught many by surprise. They announced through press releases and media organizations like CoinDesk and The Block a slew of investments in projects including $40 million for internet alternative provider Tomi, $40 million for artificial intelligence-related token Fetch.AI and $10 million in AI-focused crypto data project CryptoGPT.
But a closer examination reveals DWF, whose founders made their money as crypto high-frequency traders, isn’t exactly a venture capital firm – not always, at least.
While the recent slew of headlines refer to DWF’s partnerships with crypto projects as ‘investments,’ DWF Labs actually functions more similarly to an over-the-counter (OTC) trading desk. The company typically approaches a crypto project with a token, and offers to buy millions worth of the token at a discount to market value, according to conversations with several crypto projects that have worked with DWF.
But DWF Labs says it’s all a misunderstanding. “There might be some questions on the use of the word investment,” said DWF Labs Partner Stefano Virgilli. “When we use the word ‘investment’ – to us the most important thing is that if we’re purchasing the tokens and they’re using the funds to further develop, that’s an investment,” he added.
The controversy
Investments in crypto projects typically follow a venture capital model. Projects tap venture firms for capital via funding rounds (i.e. pre-seed, seed, Series A, etc.) and, in turn, the investors receive a portion of the project’s equity. In most cases, particularly in early stage investments where a project has not yet launched a token, investors will receive a Simple Agreement for Future Tokens (SAFT), a contract that outlines the tokens allocated to the investor if the project launches a token in the future.
DWF Labs’ investments are more ad hoc in nature and the company primarily selects for projects that have already launched a token.
While DWF Labs refers to itself as “a global web3 venture capital and market maker” or “multi-stage web3 investment firm” in press releases, the deals are often presented as “strategic partnerships” that can include token acquisitions, market making services, pledges to boost a token’s liquidity and trading volume, and additional support with marketing and media presence.
Even helping projects’ treasuries to sell their token holdings, according to the press release the firm distributed about its launch in September.
In the post, the firm said that “DWF Labs invests in digital asset companies and supports existing markets, enabling digital asset companies to sell their tokens for up-front capital without adverse price impact,” adding that “DWF Labs buys tokens with its own funds, allowing its corporate customers to sell tokens quickly.”
It is quite common in the crypto industry for market making firms to have venture capital arms. Jump Crypto and Wintermute, two heavyweights in the crypto market-making sector, both began as trading firms. But both have since expanded into cutting venture checks for projects, and even building their own pieces of core infrastructure (Jump has backed the Wormhole cross-chain bridge and Wintermute has launched its own decentralized exchange).
However, the industry standard is that these contracts should be separated. Even though the lines between the two divisions can be blurred sometimes by the market makers, some industry observers have grown concerned about DWF’s recent activity and seemingly packaging different services under partnerships.
“It’s a massive conflict of interest,” Walter Teng, research firm Fundstrat’s vice president of digital assets, told CoinDesk. “If you invest, you want the token’s price to go up. If you market make, you can manipulate the price to go up by spoofing.”
“All of their ‘investments’ are poorly disguised agency OTC (over-the-counter) trades,” a market making firm’s executive told CoinDesk, who asked not to be named due to company policy. “They make a big announcement about ‘partnerships, investments’ or some other nonsense, but in reality it is a way for token projects to sell their treasury without announcing that they are selling their treasury.”
DWF’s managing partner Andrei Grachev defended the firm’s token maneuvers in a recent tweet, calling it “dumb” if a market maker (MM) leaves all the acquired or borrowed assets in a wallet, because an “MM should create markets, provide depth, improve order execution instead of doing nothing and waiting when the market is skyrocketing to execute its call options.”
DWF Labs’ strategy
DWF Labs launched in September, as an investment-focused arm of Digital Wave Finance, a top high-frequency trading firm that trades spot and derivatives on over 40 exchanges, according to the firm’s press release.
Grachev told CoinDesk that DWF Labs’ funding comes from the money earned from profits of the high-frequency trading business. Grachev denied that the firm has received any funding from Russia, a rumor circling within the crypto industry.
Grachev said that the firm has multiple types of investments, some with token lock-ups, others without vesting period, and focuses on projects with tokens. “We prefer to have tokens but we also have several equity deals,” said. “But frankly with equity…it is not our strong side,” he said.
While he said that DWF Labs “usually do not include market making deals in our venture side,” later, he admitted that “we have pure investments without market making, we have market making [agreements] without investment, and we have [them] combined.”
“As a market maker, of course we support our portfolio. If we invest, we will provide much more liquidity to the project compared to if we don’t invest,” Grachev said.
When asked about DWF’s investment strategy and due diligence, Grachev talked about focusing on five sectors – TradFi, DeFi, GameFi, CEXs and artificial intelligence – and aiming to “have stakes in all major chains (…) in order to have access to their ecosystems.” The firm looks for projects with “life and traction,” he said, checking social media posts and what exchanges their token is listed on.
“If a project is listed on BitFinex, Coinbase or Binance, then the project is proven and good because these exchanges have very strict due diligence and very strict policies of listing,” he added.
Grachev also said DWF doesn’t usually participate in specific venture rounds. “We just approach them,” he says.
CoinDesk viewed a series of messages between DWF Labs and a crypto project that showed a member of the DWF Labs team offering to invest in the project and provide free market-making services. DWF told the project it could invest via a direct OTC purchase of liquid tokens from the project’s treasury, or with a lock-up period and market-making services.
Messages from the market maker to another project showed that DWF offered to buy tokens in daily tranches without any lock-up period at a discount or in one installment with a one-year lock-up at a steeper discount. According to the message, DWF promised to help list the token on Korean exchanges including Binance Korea which the firm has “good relationship” with, create options trading and “build narrative” leveraging DWF’s team and media presence.
There were several past announcements when DWF mashed investments and market-making deals.
One instance was its strategic partnership announcement with derivatives trading platform Synthetix. According to a press release on March 16, the firm said it acquired $15 million of the project’s native token SNX “aimed at boosting liquidity and market making,” adding a quote from Grachev that “we are thrilled to invest in Synthetix.”
Blockchain data shows that DFW’s wallet – labeled by crypto intelligence firm Nansen – received 5.3 millions of SNX directly from Synthetix’s treasury wallet between March 14 and March 16. Then, the firm transferred all tokens to Binance in multiple transactions between March 16 and 20.
Transactions between DWF Labs and Synthetix treasury. (Nansen)
In November, DWF announced a $10 million investment in the TON ecosystem. The firm’s press release said that the “strategic partnership” with the project extends to “an investment, token development, market creation and exchange listing.” The partnership also includes “50 seed investments scheduled over the next 12 months,” doubling the TON token’s trading volume in the first three months of the partnership, and developing an OTC market “to let buyers and sellers complete large transactions.”
Another case is the firm’s investment into web3 influencer platform So-Col. According to a story by crypto-focused publication The Block and cited on DWF’s website, DWF invested $1.5 million in “a round” by purchasing So-Col’s native token SIMP in February. Irene Zhao, So-Col’s founder, said that the tokens have a one-year vesting period ending in February 2024. The post does not mention other services besides investing.
However, Nansen’s blockchain data on the Ethereum blockchain shows that DWF’s crypto wallet received 3.3 million SIMP tokens between March 6 and March 24. Within the same period, DWF sent some 2.6 million tokens to KuCoin exchange, then transferred the rest to an unknown wallet on March 30. After the announcement on March 28, SIMP almost doubled from around 1.7 cents in a week, then started to plummet on April 4 towards 1 cent, per CoinGecko data.
CoinDesk reviewed Telegram messages of a So-Col representative saying that they decided to work with DWF Labs because besides serving as a market maker DWF also invested in the project directly helping to extend the startup’s runway.
Sending tokens to exchanges
Grachev said that DWF Labs keeps most of its funds and investments on centralized exchanges (CEXs) and transferring tokens to an exchange does not indicate the company will sell.
“We keep all of our inventory, almost all of our inventory, not only our investments but our own funds on exchanges,” he said.
However, keeping supposedly long-term investments on exchanges is a worrying sign for some industry experts, hidden from savvy blockchain analysts and traders whether DWF sells tokens or uses them for market making purposes.
“It’s a red flag,” a founder, who asked to remain anonymous, of a crypto analytics firm with former market making experience told CoinDesk. “They [DWF Labs] market them as an investment, and then claim to do ‘market making’ so they can keep funds on exchanges and just dump.”
It’s hard to opine on where a firm like DWF should draw the line between VC and market making. Perhaps, a page from the TradFi banking playbook could work. In that realm, investment banking and trading/research is separated by a so-called Chinese wall. Where that line might need to be drawn for crypto investment firms is unclear.
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In the interview, Grachev admits his “biggest mistake” was not properly explaining his firm’s operating philosophy and investment process. “We need to be more open. I want [the community] to know how we work and then let people decide who is right and who is not right,” he said.
Ether has risen more than 9% since the Ethereum Shanghai upgrade, which held center stage in crypto markets for much of the week. Bitcoin held fast above $30,000.
Major digital assets surged in an eventful week that included encouraging inflation veri and the much anticipated Ethereum Shanghai upgrade. Once-shaken confidence in crypto markets rose, along with valuations and trading volumes.
Bitcoin (BTC) and ether (ETH) have risen about 9% and 11%, respectively, over the past seven days, with much of the gains occurring over the latter few days.
In recent economic reports inflation was lower than expected and jobless claims were higher than expected. The Fed may have been hoping for such signs as reason to justify not raising interest rates again when the Federal Open Market Committee (FOMC) next meets in May.
Bond markets have begun to respond. The spread between two- and 10-year Treasury bonds, while still negative, has narrowed since early March.
Crypto markets’ biggest news was the completion of the Shanghai update, allowing ETH stakers to withdraw their ETH deposits. Ether has responded positively, increasing about 9% in price since the upgrade was completed.
Ether 04/14/23 (TradingView)
One of investors’ prevailing fears was that the potential unlocking of 18.2 million ETH would lead to selling pressure on the asset. However, markets have so far viewed the de- risking of ETH staking positively.
ETH’s price upswing has led to the asset chipping away at bitcoin dominance by market capitalization. Crypto market trading volume also rose, as ETH’s daily volume spiked to more than twice its 20-day moving average on Thursday. BTC volume breached its 20-day moving average each day this week, with the exception of Thursday
Both BTC and ETH breached the upper range of their Bollinger Bands this week, an indication of increased bullishness. The Bollinger Bands indicator is a technical tool that plots an asset’s moving average and two standard deviations above and below. A breach of Bollinger Bands in either direction is considered to be a significant event, in this case a bullish one.
Some altcoins had a push higher this week as well. ARB, the native token for Ethereum layer 2 system Arbitrum, led the way – up 28% over the past seven days. Solana (SOL) and Immutable X’s IMX also had strong weeks, rising 20% and 17%, respectively.
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BTC and ETH have risen about 9% and 12%, respectively, over the past seven days. While BTC has driven the market this year so far, the Shapella upgrade has boosted ETH trading, according to an analyst.
Bitcoin and ether’s prices rose handsomely in an eventful week of mildly encouraging inflation veri and Ethereum’s long-awaited Shapella upgrade.
Bitcoin (BTC) was recently trading at $30,450, up 0.4% from 24 hours ago and more than 9% for the week, according to CoinDesk veri. The largest cryptocurrency by market capitalization breached $31,000 earlier in the day before retreating during the U.S. intraday (ET).
Ether (ETH) gained 5.4% on Friday to recently trade at $2,105. It’s up over 12% for the week.
Bitcoin, Ether 7-Day Returns (CoinDesk Research)
“Ether and bitcoin have both seen upside follow-through after confirming base breakouts in late March, which are as positive intermediate-term developments on their charts,” Will Tamplin, senior analyst at technical research firm Fairlead Strategies, told CoinDesk in an email.
Tamplin noted that ETH and BTC’s next major resistance levels are roughly $2,400 and $35,900, respectively, targeted over the next several weeks.
Yet, he added that with both assets “beginning to look extended in the short term … we would not rule out a pullback in the coming days to digest recent gains,” with initial support near $1,670 for ETH and $25,200 for BTC.
Greg Magadini, director of derivatives at crypto analytics firm Amberdata, highlighted in an interview with CoinDesk that the relative expensiveness of ETH calls versus puts in ETH – also known as the risk reversal skew – currently sits positive to the call side for all expirations post-Shapella. Magadini said that this trend signals “bullish activity in the sense that people are willing to hisse more on the call side.”
Typically, a call buyer is bullish about the market, while the put buyer is bearish.
Magadini noted that while bitcoin has driven options volume, open interest and volatility this year, particularly as BTC surged in January and after last month’s banking crisis, “the Shapella upgrade is the first time that we’re getting some life back into the Ethereum market,” he said.
Prior to the upgrade, investors split on how the market would react to the event, with some expecting potential selling pressure to ETH and others believing no major impact on the market.
“On Ethereum, developers have proven that they can follow through on their vision,” Magadini said. “We’ve made a major milestone and so this brings back validity and credibility to Ethereum.”
Meanwhile, several other altcoins jumped Friday. Decentralized smart contracts platform Injective Protocol’s INJ surged more than 28% in the past 24 hours to trade at $8.64, while artificial intelligence-focused crypto protocol Fetch.ai’s FET rose by 13% to trade at 40 cents. Layer 2 network Optimism’s OP was up 7% to $2.62.
The CoinDesk Market Index, which measures the overall crypto market performance, was up 9% for the week.
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Equities wrapped up Friday lower as investors started to process the earnings season: The S&P 500 and the tech-heavy Nasdaq closed down 0.2% and 0.3%, respectively. The Dow Jones Industrial Average (DJIA) was down 0.4% for the day.
Binance assigned a zero fee discount to the BTC-TUSD trading pair last month, waiving the promotion from Tether’s USDT.
The TrueUSD (TUSD) stablecoin’s market share in bitcoin (BTC) trading volume on Binance is catching up to Tether’s USDT following the exchange’s zero fee trading discount, but data shows traders are still reluctant to use TUSD, according to crypto bilgi firm Kaiko.
Between Binance’s BTC-TUSD and BTC-USDT trading pairs, TUSD’s market share rose to 49%, almost equalling Tether’s.
“This is a massive increase over just a few weeks,” Clara Medalie, head of research at Kaiko, said.
However, TUSD’s growth could not offset the rapid decline in the BTC-USDT pair’s trading volume after Binance waived its zero fee discount for Tether, according to Kaiko data. Moreover, larger buy and sell orders are still placed for the USDT pair, per Kaiko.“This suggests that traders are still reluctant to use TUSD despite zero fees,” Medalie added.
(Kaiko)
TUSD’s rise has come as Binance, the world’s largest crypto exchange by trading volume, picked the token as heir of its preferred Binance USD (BUSD) stablecoin issued by Paxos Trust.
The exchange restored trading with TUSD after a six-month pause after Paxos’ decision to stop issuing BUSD and assigned its zero-fee trading discount to the BTC-TUSD pair and waived the promotion from BUSD and USDT starting on March 22.
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The $132 billion stablecoin market is undergoing a major upheaval stemming from a regulatory crackdown and a banking crisis in the U.S. In February, the New York Department of Financial Services (NYFDS), the state’s top financial regulator, forced Paxos to cease minting BUSD, the third largest stablecoin with a $16 billion market cap. Last month, the collapse of crypto-friendly Silicon Valley Bank, reserve partner of the second largest stablecoin USDC, sent shockwaves through the market. In the aftermath, USDC suffered more than $10 billion in outflows.
Tether’s USDT and TUSD have emerged as clear winners of the crisis. TUSD has become the crypto market’s fifth largest stablecoin with a $2 billion market cap. USDT’s circulating supply has grown $10 billion in the past months and is closing in on its all-time high.
Stablecoins are a crucial element in the crypto ecosystem, facilitating trading on exchanges and serving as a bridge between government-issued fiat money and digital assets.
TUSD is a dollar-pegged stablecoin issued by crypto firm ArchBlock, previously known as TrustToken. Its value is fully backed by fiat assets, according to blockchain data provider ChainLink’s proof-of-reserve monitoring tool. In 2020, a little-known Asian conglomerate Techteryx acquired TUSD’s intellectual property rights, TrustToken said at the time.
