Here is our pick of the 3 most important Stablecoin news stories during the week.
For the first time in the history of stablecoins, supply dropped!
This week as the Crypto markets continue their wild ride, money, not just value, moved out of the ecosystem. The market cap or measure of how many stablecoins are in circulation dropped for the first time with over 10B redeemed directly from the treasuries of major issuers.
There has also been a flight to perceived quality as Tether reduced its market cap to just below 70b but Circle has increased from 48b to 55b.
In the meantime Circle has expanded its product range by introducing a Euro stablecoin. Like USDC, Euro Coin is a regulated stablecoin that is fully backed by reserves — in this case, the euro. That means every EUROC token in circulation will have an equivalent euro-denominated reserve held in custody at financial institutions regulated by the United States.
Silvergate Bank, a crypto-friendly financial institution, was listed as the initial custodian for the euro-pegged stablecoin.
In Fiat FX markets the Euro is the second highest traded currency behind the USD, so this seems like a natural product extension for Circle.
So in summary, in a week when the addressable market increased with the implementation of a Euro coin, the market itself started valuing the difference between a collateral backed coin such as Tether and a reserve backed one in Circle. These things matter more in a risk off market but not so much in a risk on or neutral one. Crypto is very much in the category of risk assets and money is moving away and not towards them.
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years. Twitter @Alan_SmartMoney
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