Biggest Bitcoin trading pair uses obscure stablecoin TrueUSD
THE TrueUSD (TUSD) stablecoin – a token that was little known until this year – now makes up the largest Bitcoin trading pair, in a major shift spurred by the Binance crypto exchange, said data provider Kaiko.
Binance, the dominant digital-asset platform, scrapped zero-fee Bitcoin trading promotions on Mar 22, except for Bitcoin-TUSD.
That stoked demand for the pair, lifting its share of Bitcoin trading volumes on Binance to 50 per cent from negligible levels before the fee decision, Kaiko wrote in a note on Thursday (Apr 21).
The stablecoin “is the benefactor of increased volumes now, even if the reasons why Binance granted TUSD this gift are unclear”, said Kaiko research analyst Conor Ryder.
Stablecoins are key parts of the crypto sectorm where investors often park funds to use in trading. They are meant to hold a steady value – typically US$1 – and are usually backed by reserves such as cash and bonds.
Regulators have stepped up scrutiny of stablecoins over concerns about the risks they can pose.
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Last year, the wipe-out of the TerraUSD algorithmic variant contributed to a US$1.5 trillion crypto rout and the collapse of companies including FTX. Second-ranked USD Coin temporarily de-pegged during the US banking crisis, and top stablecoin Tether has faced scrutiny over the transparency of its reserves.
TUSD’s circulation surged after New York regulators in February ordered the issuer of a Binance-branded stablecoin, BUSD, to cease minting new tokens.
That move shook up the US$132 billion stablecoin sector. Whether TUSD’s popularity will weather any future removal of the zero-fee promotion on Binance is an open question.
CoinGecko data showed that TUSD is the fifth-largest stablecoin with a market value of US$2 billion, up from about US$755 million at the start of 2023.
Top-ranked Tether, or USDT, has a market capitalisation of more than US$81 billion.
“Market-depth data on Binance shows us that BTC-USDT is still king from a liquidity standpoint, with market makers evidently more comfortable with exposure to Tether over TUSD,” Ryder said, using an acronym for Bitcoin.
Kaiko also pointed out that Tether pairs account for 80 per cent of total trading volumes across centralised crypto exchanges. TUSD is on 9 per cent, and poised to take the second spot in coming months, it added.
On its website, TUSD says the stablecoin is fully backed by US dollars. The careers part of the website lists San Francisco as its global headquarters.
TUSD’s ultimate parent firm is Techteryx, which bought the intellectual property rights to the asset from Archblock in late 2020. A reserve balance report for TUSD dated Apr 21 indicated that Techteryx has a base in Singapore.
Archblock continues to operate and manage TUSD on Techteryx’s behalf through its wholly-owned subsidiary TrueCoin. BLOOMBERG
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