This post is also available in: Español
Singapore-based cryptocurrency exchange Huobi announced support for four stablecoins earlier this week, amidst plunging public trust in Tether (TUSD), the cryptocurrency market’s largest, and most controversial stablecoin.
Stablecoins Catching Up
Last month saw the launch of several stablecoin offerings backed by credible businesses, regulators, and verifiable funding. While Circle’s Center (USDC) currency was touted as an off-ramp and arbitrage solution focussing on the trading sector, the New York Department of Financial Services-approved GUSD – the Gemini Exchange-issued stablecoin – and Paxos Standard’s PAX tokens were introduced as a credible alternative to Tether. TrueUSD, based on the TrustToken platform, is marketed with a similar narrative but relies on a consortium of banking partners to provide liquidity to TUSDs instead of using a single bank account or crowd finances.
Regardless of their infancy, all the tokens mentioned have been added to Huobi, the world’s third-largest crypto-trading platform processing $1.1 billion in digital currency trades each day. The step comes after Tether, seemingly the lone wolf of stablecoins until now, faced allegations of its bank accounts closing down and a lack of transparency on its operations.
Despite all controversies, Tether ranks eighth amongst all cryptocurrencies by its $2.1 billion market cap. Huobi is incidentally the third-largest trading bourse for TUSD, with $142 million worth traded in the 24 hours leading to the time of writing.
A Huobi spokesperson revealed Tether support would continue on the platform, and the move must not be confused with delisting, at least as of now. Livio Weng, the Vice President of Huobi, added in this regard:
“Tether is one of the biggest stablecoins in the market, and realistically it will take some time before other stablecoins can catch up. We currently have no plans to restrict trading, deposits, or withdrawals in regards to Tether. However, in the interest of providing users with more choice, we are also in the process of listing several new stable coins.”
Weng said that Over-The-Counter (OTC) dealers and institutional investors are being sought as “market makers” as the stablecoin market is relatively small and unsuited to large-scale trading. For the uninitiated, makers are a prominent feature of well-liquidated financial markets as they agree to purchase and sell an asset, security, or future at predefined prices at all times to providing adequate funding and ensuring well-stabilized spreads in the market. While the activity is mostly absent in the cryptocurrency market, appointed makers could add more liquidity, stability, and order fills to the industry.
Meanwhile, the Huobi news comes after USDT crashed to an 18-month low in price after raising concerns of its opaque operations and lack of clarity on fiat funding backing the $2.3 billion protocol.
USDT trades at $0.97 at the time of writing, a significant price reduction for a stablecoin anchoring most of the cryptocurrency trading market.
Huobi’s move follows an identical announcement by Hong Kong-based OKEx, which announced it would add the same suite of stablecoins to its trading platform.