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Thursday

29 October 2020

Stablecoins race ahead: Fiat-backed crypto booming amid uncertainty

Stablecoins race ahead: Fiat-backed crypto booming amid uncertainty


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Despite this year’s uncertainty that has plagued the global economy, 2020 will go down as the year of the stablecoins due to the digital sector’s tremendous growth, with new developments emerging across the board.

Although Tether (USDT) still holds the lion’s share of the stablecoin market, Dai and USDC indeed saw growth during 2020.

From conception of the first stablecoin in 2012 with the proposal of the Mastercoin project as a way of tying cryptocurrencies to traditional assets to mitigate price volatility, developers have grown accustomed to using the U.S.

Currently, Tether is the most popular stablecoin, with a market capitalization of over $15 billion and a daily trading volume exceeding $40 billion, according to Coinmarketcap.

Like Tether, USDC has seen rapid growth, with an increased circulation above $1.8 billion in the past six months.

Thanks to Binance’s market dominance, BUSD has had one of the most explosive growth rates, with a market cap that grew from about 20 million at the start of the year to its current mark above $500 million.

Apart from TrueUSD, the TrustToken platform is also home to stablecoins backed by other national currencies including the British pound, the Australian dollar, the Canadian dollar and the Hong Kong dollar.

5, Xfers, a Singapore-based payment company, launched a Singapore dollar-pegged XSGD stablecoin.

Also, given that the stablecoin claims to be compliant with the Financial Action Task Force’s travel rule, financial institutions can use it for cross-border money transfers as well.

Saga, a U.K.-based blockchain company, has launched a stablecoin alternative to Facebook’s Libra in late 2019.

Backed by the euro, the EURS stablecoin is issued by Stasis, a blockchain-related company that aims to tokenize traditional assets.

Monerium is a fintech company founded in 2015 that hopes to simplify access to digital currencies.

The company launched its first stablecoin in January 2019 after a $2 million seed round led by Crowberry Capital, with the participation of ConsenSys and Hof Holdings.

Some analysts argue that the increased supply of stablecoins is a bullish signal as people hedge their positions.

With increased volatility, more developers will keep an eye on the developments happening among stablecoins to create financial innovations that mitigate volatility

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