Will your USDT be thundered? New York state approves multiple stablecoins but no USDT

Faced with many negative news about USDT, many currency holders are worried, will there be a thunderstorm?

Last week the New York State Department of Financial Services (DFS) published a list of 10 custodial cryptocurrencies and eight listed cryptocurrencies. The regulator explained: "Any licensed entity may use the cryptocurrencies on the list for its approved purposes." This means that exchanges do not need to be approved by DFS to list these currencies, but only need to notify DFS.

The 10 cryptocurrencies are Binance’s USD stablecoin (BUSD), Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum Classic (ETC), Ethereum (ETH), GUSD, Litecoin (LTC), PAX Gold (PAXG), PAX USD Stablecoin (PAX), and Ripple (XRP). In addition to ETC and XRP, other cryptocurrencies have been pre-approved for listing.

It is worth noting that this list includes three U.S. dollar stablecoins, namely BUSD, GUSD and PAX, and there are no current most mainstream stablecoins USDT and USDC. The data shows that the current top three stablecoins by market value are USDT, USDC, and DAI. PAX ranks fourth, BUSD ranks sixth, and GUSD ranks fifteenth. USDT occupies 80% of the market share, and the market value of USDC is about 1/10 of that of USDT.

USDT has become the most widely used cryptocurrency at present, ranking fourth in the market value of cryptocurrency, surpassing Ripple to reach the third place just around the corner. The biggest obstacle to the development of USDT is regulation. USDT’s issuer Bitfinex, Tether and New York and the US regulatory authorities are not smooth. Zhao Dong, a small shareholder of Bitfinex, also believes that the US government’s crackdown will become the main risk of USDT.

Bitfinex and Tether are facing multiple lawsuits ahead of the New York Department of Financial Services whitelist. In April last year, New York prosecutors accused Bitfinex of secretly using Tether's reserves to compensate $850 million (losses caused by hackers). The charges stem from allegations made by the NYPD and the New York Attorney General. The Attorney General has obtained a court order prohibiting Bitfinex from further withdrawing from Tether and requiring Bitfinex and Tether to hand over documents related to the investigation, which the Attorney General believes will cause Bitfinex to embezzle a large amount of customer and company funds and USDT.

With such a tense relationship between New York State and Tether, it is naturally impossible to enter this white list. The measures taken by the US government are likely to be huge fines.

In an interview, Yang Mindao, the founder of DForce, believed that the investigation by the US Department of Justice and the New York State Attorney General may cause USDT operators to bear high fines or even go bankrupt. If the issuer of USDT is convicted, whether it is criminal or civil, it may face heavy fines. In addition, USDT is actually a product of the free market pricing of U.S. dollars in the Chinese market. How long this "freedom" can last is also subject to great uncertainty. In fact, since the People's Bank of China has cracked down on money laundering this year, there have been constant rumors about USDT supervision, but there is no good way. It may only be possible to exert pressure from legal currency/USDT circulation channels and public opinion.

On the other hand, under pressure, USDT issuers are gradually submitting to regulatory pressure and have begun to freeze some addresses. Tether said that addresses blacklisted this year hold USDT worth $5.51 million to assist law enforcement in their investigations.

If you want to wear a crown, you must bear its weight. USDT has a first-mover advantage, has been adopted by major exchanges and wallets, and has the diversity built on different chains. It is indeed convenient and easy to use, but its risks should not be underestimated.

Several compliant stablecoins approved by New York State are candidates for consideration. Unlike USDT, they have basically been strictly audited, and USDT has not been audited so far. Among the three familiar exchanges in China, in addition to BUSD under Binance, USDK under OK and HUSD under Huobi also regularly issue audit reports. It has become an industry standard to issue audit reports for stablecoins. All stablecoins need to be considered.