The TrueUSD (TUSD) stablecoin has seen a significant increase in Bitcoin (BTC) trading volume on Binance, nearing Tether’s (USDT) dominance. This development comes after Binance introduces a zero-fee discount for the BTC-TUSD trading pair. However, despite this rapid growth, traders appear hesitant to use TUSD as their preferred stablecoin. This article delves into the reasons behind TUSD’s rise and the reluctance of traders to adopt it.
TrueUSD’s Growth in Bitcoin Trading Volume on Binance
Following Binance’s decision to offer a zero fee discount on the BTC-TUSD trading pair, TUSD’s market share in BTC trading volume has risen to 49%, almost equal to Tether’s USDT.
According to Clara Medalie, head of research at Kaiko, this increase is substantial in just a few weeks. However, the BTC-USDT trading pair’s volume has not been significantly affected, and larger buy and sell orders continue to be placed for the USDT pair. That suggests that traders remain hesitant to use TUSD despite the zero fees.
Binance, the world’s largest crypto exchange by trading volume, selected TUSD as the successor to its preferred Binance USD (BUSD) stablecoin issued by Paxos Trust. After a six-month pause in trading, Binance resumed TUSD trading due to Paxos’ decision to stop issuing BUSD.
Binance then assigned the zero-fee trading discount to the BTC-TUSD pair and removed the promotion from BUSD and USDT starting on March 22.
The $132 Billion Stablecoin Market’s Shift
The stablecoin market, valued at $132 billion, is experiencing significant changes due to regulatory crackdowns and banking crises in the U.S.
In February, the New York Department of Financial Services (NYFDS) forced Paxos to cease minting BUSD, the third-largest stablecoin with a $16 billion market cap.
Additionally, the collapse of crypto-friendly Silicon Valley Bank, reserve partner of the second-largest stablecoin USDC, sent shockwaves through the market, resulting in more than $10 billion in outflows for USDC.
Tether and TrueUSD: Beneficiaries of the Crisis
Tether’s USDT and TrueUSD have emerged as clear winners from the turmoil in the stablecoin market. TUSD has become the fifth-largest stablecoin with a $2 billion market cap, while USDT’s circulating supply has grown by $10 billion in recent months, approaching its all-time high.
Stablecoins play a crucial role in the crypto ecosystem by facilitating trading on exchanges and bridging government-issued fiat money and digital assets.
TrueUSD is a dollar-pegged stablecoin issued by crypto firm ArchBlock, formerly TrustToken. Its value is fully backed by fiat assets, as confirmed by blockchain data provider ChainLink’s proof-of-reserve monitoring tool. In 2020, Asian conglomerate Techteryx acquired TUSD’s intellectual property rights, according to TrustToken.
TrueUSD’s rapid growth in Bitcoin trading volume on Binance, fueled by the zero-fee discount, poses a potential challenge to Tether’s dominance.
However, traders’ reluctance to use TUSD indicates that it may take more time and effort to establish TUSD as a preferred stablecoin in the crypto market.
As the stablecoin landscape continues to shift, it remains to be seen how TrueUSD will fare against its competitors.