The battle for premier Cryptocurrency is in full force as investor confidence is split between USDC and USDT. This follows the US crackdown on financial services associated with cryptocurrencies, causing USDC to de-peg and lose $10 billion in market share. In contrast, USDT's market cap skyrocketed, recording a near two-year high due to the investor preference of its parent company iFinex, which is headquartered in Hong Kong and therefore perceived as having less risk of censorship.

In addition to increased regulations, the macroeconomic conditions have also influenced the current stablecoin landscape. Stablecoin issuers have benefited immensely from the high-interest rates of the past year, leading to their noteworthy profits and robust treasury reserves. However, banks have been resistant to the blockchain sector, as it is significantly competing with them and contributing to their reduced liquidity and higher levels of volatility.

The higher rates are advantageous to stablecoin holders as they get to pocket the entire interest income, unlike banks who must service their deposits. It is this dichotomy which has increased the tension between crypto developers and regulators. Ultimately, the crypto space requires sophisticated legal restraints and regulatory clarity if it is to continue its development and expansion.



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