Blockchain intelligence firm Chainalysis recently reported a decline in stablecoin trading volume in the United States.
“Though U.S. entities originally helped legitimize and seed the stablecoin market, more crypto users are pursuing stablecoin-related activity with trading platforms and issuers headquartered abroad,” the report stated.
United States Losing Stablecoin Market To Overseas
According to Chainalysis, stablecoins have been responsible for more than 50% of all on-chain transaction volume on centralized exchanges in recent times.
The report stated:
“Chainalysis data shows that more than half of all on-chain transaction volume to or from centralized services between June 2023 and July 2022 took place in stablecoins.”
However, during this period, most stablecoin inflows to the 50 largest crypto services have transitioned from services licensed in the US to those overseas.
“As of June, a 54.6% share of stablecoin inflows to top 50 services were going to non-U.S. licensed exchanges.”
Read more: What Are Algorithmic Stablecoins?
US Government’s Growing Concern for Stablecoin Regulation
However, the report highlights the fact that the majority of stablecoins are tied to the US dollar. Furthermore, it points to the importance of the US government’s vigilant regulation efforts:
“More than 90% of stablecoin activity takes place in stablecoins pegged to the U.S. dollar. U.S. regulators have a strong interest in exercising some regulatory authority over stablecoins, given the central role of USD-denominated reserves to these assets.”
Meanwhile, Jason Somensatto, Head of North American Public Policy at Chainalysis observed that regulating stablecoins presents certain complexities, but these issues are expected to be resolved in the near future:
“These debates are resolvable and should be solved soon in the interest of global competition and necessary regulation.”
This comes following the U.S. House Financial Services Committee publishing a draft of its stablecoin bill on April 15. The Bill suggests several changes, including a pause on algorithmic stablecoins and giving the Federal Reserve control over stablecoins from nonbank companies.
According to DefiLlama, the total market cap of stablecoins currently amounts to $124.56 billion. Meanwhile, USDT boasts a dominant share of 67.6%.
On September 22, BeInCrypto reported that new data revealed the market capitalization of stablecoins fell to $124 billion in September. This was its lowest level since August 2021.
However, among 118 stablecoins, BUSD and FRAX recorded the most substantial declines among the top 10 by market capitalization.
BUSD’s market cap decreased by 19.2% to $2.5 billion. Meanwhile, FRAX saw a decline of 16.7%, bringing its market cap down to $670 million.
Read more: What Is a Stablecoin? A Beginner’s Guide
The post United States Faces Abrupt Fall in Stablecoin Activity, According to Chainalysis appeared first on BeInCrypto.