According to a January 14 tweet, Tether USDT handled $18.2 trillion in transactions in 2022, surpassing more established payment processors like Visa and Mastercard.
Comparatively, transactions processed by Mastercard and Visa were $14.1 trillion and $7.7 trillion, respectively.
The huge transaction volume of Tether demonstrates the significant expansion of stablecoins over the past several years. Stablecoins have prospered despite the difficulties the crypto sector is now undergoing. The use of stablecoin increased in nations where their national fiat currency was suffering due to the state of the global economy.
Despite stablecoins’ increasing popularity in 2022, Tether had a challenging year.
Since the demise of the FTX cryptocurrency exchange in November and Terra UST in May, further questions have been raised concerning Tether’s holdings and viability.
When Terra’s collapse FUD was at its strongest, the stablecoin momentarily lost its peg to the US dollar. The stablecoin issuer honoured more than $10 billion in redemption requests during this time. Later, BeinCrypto stated that a number of conventional financial institutions had shorted USDT because to rumours regarding the currency’s financial stability.
While USDT continues to be the most popular stablecoin on the cryptocurrency market, competitors like USDC and BUSD won against it in 2022. To put things in perspective, over the reporting period, Tether’s market value dropped from an all-time high of $83.13 billion to a low of $65.31 billion. The market capitalization of USDC, however, increased to $56 billion before falling.
Centralized cryptocurrency exchanges like Coinbase encouraged their users to transfer their USDT holdings into USDC at this time. Recent delisting of USDT for Canadian users on Crypto.com was done for reasons of regulatory compliance.
According to Glassnode statistics, towards the end of 2022, USDC’s transfer volumes were nearly five times more than USDT’s. Investors think USDC is a safer alternative than USDT, which is why its popularity has increased.
The assets of USDC are secured by cash or short-term US Treasury securities, and Grant Thornton, a leading international accounting company, audits it. Tether, on the other hand, has not been very open about its audits or reserves.
These problems have led some members of the cryptocurrency industry to doubt Tether’s estimates of its trading volume in 2022. Others demanded the stablecoin issuer to disclose its reserves, while some blamed wash trading for the metrics.