Why is USDC market dominance on a fresh decline while Tether’s USDT gaining ground?

U.S. regulators to be blamed?

Over the last few weeks, the United States has initiated some strong regulatory measures cracking down on crypto firms. Last week, the U.S. Treasury announced a complete ban on crypto mixer Tornado Cash calling it a tool to launder money across the world.

Following the news, Circle immediately froze the USDC in the account addresses as mentioned by the U.S. Treasury. These were the addresses that have been using the Tornado Cash services. Many industry experts called it a heavy-handed action by U.S. regulators. Popular crypto investor Ryan Sean Adams points out:

Today the US sanctioned Ethereum addresses associated w/ a privacy service called Tornado cash. Circle immediately froze the USDC in those accounts. GitHub suspended contributors to Tornado. If you were waiting for the opening shot of big brother’s assault on crypto this was it.

However, the Tornado Cash ban is a pretty recent event while the USDC market share started on a decline even before that. However, it still stands at 25% gains year-to-date. Also, increasingly USDC’s market share significantly amid the crypto market crash shows Circle’s determination to serve the market demand.

Will USDC overtake USDT by 2022 end?

Several market analysts have been predicting that Circle’s USDC stablecoin could possibly overtake Tether’s USDT to become the largest stablecoin by market cap.

On the other hand, during the Terra LUNA ecosystem collapse, Tether’s USDT suffered a depeg with the stablecoin value falling to 95 cents. This too has played somewhat in favor of Circle’s USDC. Explaining a critical reason why USDc can overtake USDT, CNBC writes:

Circle has taken special care and efforts to ensure that USDC is open source and available on all the major blockchains. This helps developers easily incorporate USDC as a payments protocol on their websites and apps through a readily available API.

Businesses and entrepreneurs will find it much easier now to transact across borders and let their international businesses flourish without someone taking a piece of the pie as transaction fees.

This shows that USDC is getting greater acceptance among individuals and businesses alike due to its global liquidity. However, it remains to be seen whether if the U.S. regulations could play a spanner in the wheel of Circle’s growth.