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Bitcoin No Longer Rules the Roost in Tether World

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  • Alex Dovbnya
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    The Ethereum-based version of Tether surpassed the one issued on the Bitcoin Blockchain

Bitcoin No Longer Rules the Roost in Tether World
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According to CoinMetrics data, Ethereum has finally flipped Bitcoin in terms of the number of Tether USDT tokens issued on its Blockchain.  

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Tether Is Chipping Away at Bitcoin's Payments Volume as Merchants Are Turning to Leading Stablecoin

Flipping Bitcoin after a chain swap

Tether, which initially issued its stablecoin on the Bitcoin-based Omni Layer Protocol, launched a new version of USDT on the Ethereum Blockchain back in January 2018. 

The ERC-20 version started to pick up steam very fast over the last seven months. CoinMetrics data showed it already became the most utilized stablecoin back in August based on the number of transactions.    

On Oct. 29, the company conducted a gargantuan chain swap with 300 mln Omni-based USDT moved to the Ethereum Blockchain, which allowed the flippening to happen.     

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Tether Ceding Ground to Competitors as Stablecoin Wars Pick Up Steam: Research

Moving to exotic Blockchains

Tether is not shying away from other Blockchains. As of Oct. 28, Justin Sun announced that the total amount of Tether issues on the Tron Blockchain reached 800,000 USDT. As reported by U.Today, the charismatic CEO predicted that TRC20-based USDT would become the world's biggest stablecoin.   

There are also other versions of the controversial stablecoin that appeared on EOS and Algorand networks earlier this year. At the end of July, it also debuted on the Liquid Network.     

Bloomberg claimed that it would be harder to track transactions on exotic Blockchains, which might be the main reason for abandoning Bitcoin.   

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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Federal Reserve System: Stablecoins Pose Potential Risks to Financial Stability

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  • Vladislav Sopov
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    According to its Financial Stability Report of November 2019, the Board of Governors has warned about the dangers of stablecoins.

Federal Reserve System: Stablecoins Pose Potential Risks to Financial Stability
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Contents

The Board of Governors of the U.S. Federal Reserve System have issued their monthly Financial Stability Report. This special report is dedicated to the profits and risks of "global stablecoins".

Stablecoins: Global System with So Many "Ifs"

First, the Federal Reserve admits to the numerous advantages that stablecoins present as a concept. It has been highlighed that stablecoins are "faster, cheaper, and more inclusive payments could complement existing payment systems". This is in comparison to cases where traditional financial institutions are sophisticated and poorly accessible. Stablecoins can also be managed to eliminate the volatility of cryptocurrencies, which is one of the borders for them to be utilized as the medium for exchange.

Therefore, the "global stablecoin initiatives" like Facebook's Libra can rapidly achieve cross-border adoption. However, the major threat for stablecoins is apparent - the "inability to convert in national currency". The loss of confidence in "pegging" the stablecoin to traditional assets can lead to a run, in which several holders will attempt to liquidate their stablecoins at the same time.

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Tether Ceding Ground to Competitors as Stablecoin Wars Pick Up Steam: Research

This dramatic scenario may be caused by "poor design and governance", and can result in severe consequences for international economic activity, asset prices, and financial stability.

Transparency First

The Federal Reserve also outlined in its report that in many cases, stablecoins can be utilized for money laundering, terrorist financing, and other financial crimes. Therefore, the Federal Reserve would require operators of such systems to conduct their Due Diligence, as well as Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures to avoid any abuse. Moreover, the problems of disclosure policy and protecting investor data should be of paramount importance for stablecoin issuers:

Disclosures should clearly detail consumer and investor rights and protections, including whether the holder of the stablecoin has any rights to the underlying asset. Issuers should be transparent on how the stablecoin is tied to the underlying asset, has been said in the Report.

Last but not least, the report highlighted that the Federal Reserve, together with the Group of Seven, will closely monitor stablecoin developments as well as all the risks associated with it.

Have anyone ever invested in stablecoins? Do you prefer to use it, or to pay extra fees for fiat gateways? Tell us your story on Twitter!

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About the author

 Blockchain Analyst & Writer with scientific background. 5+ years in IT-analytics, 2+ years in blockhain. Worked in independent analysis (Crypto Briefing) as well as in start-ups (Swap.online, Monoreto, Attic Lab etc.)

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