Stablecoin Economy Shrinks by $7.3 Billion in 2023, USDC and BUSD Record Mass Redemptions

From the beginning of this year, the crypto economy has surged by 41.77%, reaching a current market capitalization of $1.17 trillion. However, amidst this growth, the stablecoin economy experienced a substantial loss of $7.3 billion within a span of 140 days.

Timeline of Binance-usd, Usd-coin

Reflecting on events like the Terra collapse in the spring of 2022 and the de-pegging of USDC less than a year later might cause one to question the accuracy of the term “stablecoin.”

As has been known for some time, Stablecoins are becoming increasingly popular in the blockchain sector because, unlike normal cryptocurrencies, their value is pegged 1:1 to that of a given fiat currency.

Stablecoin issuer Circle has reportedly adjusted its treasury reserves to mitigate the risk of US debt defaults. Amid the ongoing banking crisis in the United States, Circle CEO Jeremy Allaire stated on May 10 that the company has altered the mix of reserves backing its USD Coin (USDC) by transitioning to short-dated US Treasurys to sidestep potential involvement in a US debt default.

The number of wallets sending and receiving BUSD transfers slumped to a new two-year low on May 2, data from Glassnode showed.Declining trading activity comes after U.S. regulators cracked down on stablecoin issuer and crypto trust company Paxos.The Binance-branded token slumped further as protocols, investors, and platforms lost faith in the stablecoin.Meanwhile, Tether's USDT dominance over the stablecoin market strengthens while rival issuers navigate regulatory scrutiny and banking debacles. Binance USD (BUSD) transactions dipped to a fresh two-year low on May 2, 2023 months after regulatory scrutiny and widespread loss of faith punctured the stablecoin's market cap.

Decentralized insurance protocol Etherisc on Thursday announced its new peer-to-peer coverage option, meant to potentially cover participating users should USDC depeg again in the future.

Circle, the fintech company behind the USD Coin stablecoin, has released the Cross-Chain Transfer Protocol (CCTP), which allows users to transfer USDC seamlessly between the Ethereum and Avalanche blockchains.

Stablecoin issuer Circle announced on April 26 the mainnet launch of its cross-chain transfer protocol with support for two blockchains. Circle launches CCTP The product, called Cross-Chain Transfer Protocol (CCTP), allows developers to easily move the USDC stablecoin between Ethereum and Avalanche.

Circle, the company behind the US Dollar Coin (USDC), has announced the launch of its mainnet protocol that enables users to seamlessly transfer USDC between Ethereum and Avalanche. This revolutionary Cross-Chain Transfer Protocol (CCTP) eliminates the need for USDC bridges, simplifying transactions and enhancing security for users.

Circle CEO Jeremy Allaire has blamed the declining market capitalization of USD Coin (USDC) on the cryptocurrency crackdown by US regulators. Allaire cited global concern about the US banking system and regulatory environment as major factors.

Circle has released a mainnet protocol allowing users to transfer USDC between Ethereum and Avalanche. The Cross-Chain Transfer Protocol (CCTP) eliminates the need for USDC bridges and aims to reduce fragmentation in the Web3 ecosystem.