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Home Markets Cryptos

Stablecoin sector grew to approximately $140 billion in 2021

Ajibola AkamobyAjibola Akamo
1 year ago
in Cryptos
Stablecoin sector grew to approximately $140 billion in 2021
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According to data from The Block’s “2022 Digital Asset Outlook,” the stablecoin cryptocurrency sector saw an explosive growth in 2021. According to the data, the stablecoin sector grew by 388% from $29 billion at the start of the year to over $140 billion at the end of the year, representing a record high.

The report reads, “In 2021, stablecoins continue to prove to be one of the growing handful of cryptocurrencies that have found product-market fit and broader institutional acceptance, with Centre, the firm behind USDC, is planning to go public through SPAC.”

The report also revealed that stablecoin usage was at an all-time high in 2021. The report stated that the annual stablecoin adjusted transaction volume which is a measure of payment flow from one address to another on a public blockchain, crossed $5 trillion in 2021. This represents a 370% growth when compared to 2020’s volumes.

What you should know

The stablecoins taken into consideration for the report includes Tether’s USDT, Binance’s BUSD, The Centre consortium’s USDC, Huobi’s HUSD, Gemini Dollar’s GUSD, Pax Dollar’s USDP and MakerDAO’s DAI.

Tether’s USDT accounts for the lion share of the sector, as its market capitalization of $78.2 billion, means that it accounts for 47.7% of the entire stablecoin market capitalization which currently stands at $163.8 billion, according to Coinmarketcap. Tether is currently ranked #4 by market capitalization in the entire cryptocurrency space.

In the United States, regulators have shared concerns about the role of stablecoins and how they can cause an imbalance in the cryptocurrency space. Senator Elizabeth Warren in 2021, has had strong opinions about stablecoins and the entire cryptocurrency space. On December 15, 2021, she explained that stablecoins must be regulated to safeguard the financial system. She stated, “Stablecoins provide the lifeblood of the DeFi ecosystem. In DeFi, people need stablecoins to trade between different coins, to trade derivatives, to lend, to borrow money — all outside of the regulated banking system. Without stablecoins, DeFi comes to a halt.”

In 2021, we saw the most controversial year Tether yet as a Bloomberg report accused the top stablecoin issuer of not having enough reserves to back its stablecoin issuance and accusing Tether’s Chief Financial Officer, Giancarlo Devasini of using the company’s reserves to make investments which is in direct contradiction of Tether’s public position that its stablecoin is fully backed at all times.

In 2022, it is expected that as more people participate in the cryptocurrency space, more stablecoins will be issued, thereby ultimately increasing the market capitalization of the sector. However, with regulators clamping down on the sector, we might see a slow growth in the space in 2022.

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Tags: CryptocurrencyStablecoin

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