The Abu Dhabi Global Market’s (ADGM) Financial Services Regulatory Authority has officially recognized Tether’s USDt (USDT) stablecoin as an accepted virtual asset (AVA). This move comes as a significant development in the world of cryptocurrencies, with licensed financial service providers within the ADGM now able to offer services related to USDT and facilitate its integration into regulated financial ecosystems.
Regulatory Acceptance
With this approval, the ADGM has acknowledged the growing importance of stablecoins like USDT in bridging the gap between traditional finance and digital asset markets. By recognizing USDT as an AVA, the ADGM is taking a step towards creating a more inclusive and innovative financial environment.
Market Capitalization Exceeds $138 Billion
USDT’s inclusion as an AVA comes with a significant market capitalization exceeding $138 billion. This strengthens its position as the largest stablecoin in the sector, cementing its influence on the crypto market.
Related: Analyst Warns of ‘Leverage Driven’ XRP Pump as Token Flips Tether
Regulatory Environment
The ADGM’s decision reflects the increasing role of stablecoins in the financial ecosystem. However, some regulators have raised concerns about the integration of stablecoins with traditional finance.
Related: Tether Discontinues Support for Euro-Pegged Stablecoin EURt and FSOC Warns About Stablecoin Integration
According to the United States Financial Services Oversight Council (FSOC), stablecoins present risks to financial stability due to their lack of solid risk management standards. The council has pointed out that the market is ‘heavily concentrated,’ with a single firm (Tether) holding roughly 70% of the sector’s ‘total market value.’
Stronger Risk Management Standards
The FSOC has called for stronger risk management standards to address vulnerabilities, including exposure to bank runs and systemic risks. This move highlights the need for regulatory bodies to maintain a balance between innovation and stability in the financial ecosystem.
Tether Injects Over $5 Billion into the Crypto Market
In November, Tether went on a minting spree, injecting over $5 billion into the market within 72 hours. This event sparked discussions about its influence on the crypto market. Data from Spot On Chain, a blockchain analytics platform, detailed the timeline of issuance events.
The first $1 billion, minted on Nov. 6, coincided with Bitcoin (BTC) climbing to a record high of $76,200. The minting event launched USDT’s market cap to around $124 billion in early November, soaring to $132 billion by Nov. 26 before finally landing around $138 billion on Dec. 10 after the ADGM approval.
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