In 2022, Tether USDT processed $18.2 trillion in transactions.
Traditional financial processors like Visa & Mastercard suffered a decline in volume.
Tether's solvency and reserves are still in question.
In comparison, Mastercard and Visa processed $14.1 trillion and $7.7 trillion in transactions, respectively.
Tether's high transaction volume confirms the rapid expansion of stablecoins in recent years. Despite the industry's challenges, stablecoins appeared to be growing. Also, stablecoin adoption increased in countries where the current economic situation has put their native fiat currency at a disadvantage.
Tether had a tough year in 2022, despite the increased adoption of stablecoins.
After the collapse of Terra UST in May and the FTX crypto exchange in November, Tether has faced increased criticism over its reserves and viability over the past year.
At the time of Terra's collapse, the stablecoin suddenly lost its peg to the US dollar. The stablecoin issuer paid nearly $10 billion in repayments over this time period. Several media outlets later revealed that some traditional financial institutions have taken short positions against USDT because of financial health concerns.
While USDT remains the leading stablecoin in the crypto market, rivals like USDC and BUSD overtook it in 2022. Tether's market cap fell from a high of $83.13 billion to as low as $65.31 billion throughout the reporting period. However, USDC's market cap increased to $56 billion before declining.
During this time, centralized crypto exchanges such as Coinbase pushed their users to convert their USDT holdings to USDC. Recently, Crypto.com delisted USDT from its platform for Canadian users, citing regulatory compliance requirements.
The adoption of USDC has increased because investors believe it is a safer option than USDT. USDC's assets are backed by cash or short-term US treasuries, and it is audited by the worldwide accounting firm Grant Thornton. However, Tether has been cautious about its reserves and audits.
Due to these difficulties, some members of the crypto community have questioned Tether's data on its 2022 trading volume. Some blamed the numbers on wash trading, while others demanded that the stablecoin issuer publish its holdings.
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