Stablecoin market cap drops to near two-year low as Spot Bitcoin ETF proposals move forward
Data from CryptoCompare shows that the price of the flagship cryptocurrency Bitcoin (BTC) moved mostly sideways throughout the past week, starting at around $30,000 and maintaining that level throughout most of the week, before plunging to $29,300 over the weekend.
Ethereum’s Ether, the second-largest digital currency by market capitalisation, moved slowly downward throughout the week, starting at around $1,910 and slowly moving to $1,875 before a weekend sell-off saw it move to $1,845 where it’s currently trading
Headlines in the cryptocurrency space this week focused on the aftermath of a landmark ruling in the case between the US Securities and Exchange Commission (SEC) and Ripple Labs, which saw a federal judge rule XRP is “not necessarily a security on its face”.
The case led to Ripple hope US banks and other financial institutions will soon become more receptive to the adoption of XRP for cross-border payments through its On-Demand Liquidity (ODL) product, which uses XRP for money transfers.
Headlines also focused on the race to list a spot Bitcoin exchange-traded fund (ETF) in the United States, with the world’s largest asset manager BlackRock seeing its application for it get added to the SEC’s official schedule.
This is a major step for the listing of a spot Bitcoin ETF in the US, which BlackRock applied for in June with its iShares Bitcoin Trust. After BlackRock’s application, many other financial firms followed suit and filed for their own spot Bitcoin ETFs, including Fidelity and Invesco.
When the SEC hinted last month that BlackRock’s proposal was deficient, the firm submitted a modified application that included a “surveillance sharing” agreement with the Nasdaq-listed cryptocurrency exchange Coinbase.
Filings from other financial behemoths, including that of Valkyrie, Fidelity, and ARK Invest, also included surveillance sharing agreements with Coinbase, meant to oversee and report on potential illegal activities.
As spot Bitcoin ETFs proposals move forward and in the aftermath of the favorable ruling, the total market capitalization of the stablecoin sector kept on dropping, to hit its lowest level since August 2021. The sector’s market cap has been dropping for 16 consecutive months, according to CCData’s latest Stablecoins & CBDCs report.
The report shows that the stablecoin market cap dropped 0.82% from the start of the month until July 17, with Tether’s USDT dominating 65.9% of the stablecoin sector’s market share.
USDC and BUSD also saw their market capitalization shrink, losing 3.01% and 4.57% to $26.9 billion and $3.96 billion respectively, marking the seventh month in a row of decline for USDC, which hit its lowest market share since June 2021
The market dominance of the stablecoin sector has meanwhile fallen to 10.5% in June, which is far below its all-time high of 16.6% seen in December 2022. Trading volumes nevertheless rose last month to $482 billion.
G20 nations back FSB’s tougher crypto rules
Under the leadership of India’s Finance Minister, Nirmala Sitharaman, the Group of 20 (G20) has endorsed the Financial Stability Board’s (FSB) advanced directives for crypto-asset supervision and global stablecoin protocols.
The FSB’s recommendations came in the wake of traditional finance entities advocating for robust crypto oversight, while prominent players in the crypto sphere, such as Binance and Coinbase, have cautioned that stringent regulations might stifle innovation.
Meanwhile, Russia has moved forward with its digital ruble trials, joining an increasing number of nations exploring the digital currency sphere even amid its ongoing invasion of Ukraine, which has led to its growing global isolation.
Legislation enabling the formation of a national digital currency is soon to be reviewed by Russia’s upper parliamentary chamber, the Federation Council, and the Bank of Russia could commence trials of the digital ruble as soon as next month.
Over in the United States, Nasdaq has halted the launch of its own cryptocurrency custody service, which was set to launch by the end of the second quarter, while Senior House Republicans have introduced an extensive bill aimed at bringing substantial changes to the cryptocurrency landscape.
The legislation, called “the Financial Innovation and Technology for the 21st Century Act,” mandates the creation of clear definitions for “blockchain” and “digital asset” within existing financial law, and for the creation of rules specifically for crypto exchanges.
Moreover, Robert F. Kennedy Jr., the Democratic contender for the U.S. presidency, has proposed a noteworthy plan to invigorate the American economy, including exempting Bitcoin conversions to U.S. dollars from capital gains tax and supporting the dollar with “real finite assets” like gold, silver, platinum, and Bitcoin.
In France, Societe Generale’s blockchain unit, Societe Generale Forge, has become the inaugural recipient of a license under France’s new cryptocurrency regulations, propelling the investment bank’s ventures into the realm of digital assets.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
Featured image via Unsplash.