Welcome to This Week in Crypto, your essential roundup of the latest and most significant developments in the cryptocurrency world. This week, we delve into the impressive surge in stablecoin usage, which underscores their increasing influence in the financial sector. We also cover a pivotal update from the SEC, which has concluded its investigation into Ethereum 2.0, clearing it of any securities violations. Additionally, we explore Tether’s launch of Alloy, a gold-backed stablecoin designed to blend the security of gold investments with the utility of digital currency.
Stablecoin Usage Increases 16-Fold, Surpassing $1.68 Trillion in Monthly Transfers
In the past four years, the usage of stablecoins has surged significantly. Monthly transfer volumes for stablecoins reached a new peak of $1.68 trillion in April, marking an impressive increase from $100 billion in October 2020. This 16-fold growth, according to data from Token Terminal, shows stablecoins as a critical link between traditional finance and the digital asset market. The total market capitalization of all stablecoins now stands at over $162 billion, up more than 24% since the beginning of the year. Additionally, Visa reports show that over 31.1 million people are actively using stablecoins, completing more than 353 million transactions last month, indicating a robust user base.
The expansion in stablecoin usage not only underscores their role in facilitating transactions but also highlights their utility in more complex financial activities. According to Sami Start, co-founder and CEO of Transak, stablecoins are increasingly used to purchase properties, secure loans, and enable borderless financial transactions. This expansion is partly driven by the integration of tokenized real-world assets, widening access to global financial markets and promoting economic inclusivity. In March, the cumulative stablecoin transfer volume surpassed $1 trillion for the first time, with major contributions from Tether and USD Coin, the world’s largest stablecoins, which accounted for the majority of this volume.
SEC Wraps Up Ethereum Probe, Finds No Securities Violations
Consensys, a leading Ethereum developer, announced a significant development as the U.S. Securities and Exchange Commission (SEC) decided to close its investigation into Ethereum 2.0, confirming that Ethereum (ETH) sales are not considered securities transactions. This decision comes on the heels of the SEC’s approval of Ethereum spot ETFs last month, reinforcing the classification of ETH as a commodity. This closure marks the end of a year-long scrutiny by the SEC, which involved a lawsuit filed by Consensys in April against the SEC’s attempt to label Ethereum as a security.
Despite the SEC’s disclaimer that the closure of the investigation doesn’t imply exoneration, Consensys views this as a victory for Ethereum developers and the broader crypto industry, seeking to clear the cloud of regulatory uncertainty that has hovered over the sector.
Tether Introduces Alloy, a New Gold-Backed, Dollar-Pegged Stablecoin
Tether has launched a new stablecoin named Alloy (aUSDT), which uniquely combines the features of gold backing and the U.S. dollar. This introduction marks the first in a series of assets that Tether plans to offer, which are part of its broader strategy to develop a platform for tokenizing real-world assets. Alloy is backed by Tether Gold (XAUt), a token that represents ownership of physical gold, yet it is pegged to the U.S. dollar, creating a synthetic dollar designed to replicate the dollar’s value and utility without direct dollar reserves.
The newly launched Alloy by Tether platform not only allows for the creation of Alloy but also paves the way for future digital assets that could include yield-bearing products. This innovation offers dual benefits: it gives long-term holders the opportunity to maintain their investment in gold while providing them a dollar-referenced asset for everyday transactions and economic activities. According to Tether, this approach aims to provide both stability and flexibility to its users, addressing the demand for more secure and versatile digital financial products.
