In a report, the digital asset market research company Kaiko stated that stablecoins with centralized reserves dominate cryptocurrency trading. However, recent volatility has shown that markets heavily depend on stablecoins which lack transparency in their reserve. TrueUSD poses the greatest risk.

Kaiko data indicates that as of Thursday, 74% all transactions made on centralized crypto-exchanges were stablecoins. Only 23% of these transactions involved fiat currencies.


The trading volume of TrueUSD, which was recently under scrutiny because of the collapse of its banking partner Prime Trust as well as disruptions to its reserve reporting has grown dramatically from less than 1 percent in just three months. Tether’s USDT – which in the past was partially supported by Chinese Commercial Papers – claimed 70% of trading volumes.

Stablecoins, which are cryptocurrencies that tie their value to another asset – most commonly the U.S. Dollar – have been a major part of the crypto ecosystem. They facilitate trading and onboarding with government-issued fiat currency. According to CCData, the asset class has a total market capitalization worth $128 billion.

In the past few months, all of the largest stablecoins experienced periods of turmoil. Paxos was ordered by New York regulators in February to stop minting Binance USD, the third-largest stablecoin of the time. The collapse of Silicon Valley Bank, which occurred next month, temporarily frozen a large portion of USDC’s cash reserves. This affected Maker’s DAI stablecoin. USDT was under sell pressure last month in a stablecoin liquidity pool that frightened traders. TUSD also survived the collapse of its partner.

Clara Medalie of Kaiko’s research department noted that these volatile periods have highlighted the vulnerabilities and risks of stablecoins.

She said that crypto markets rely heavily on stablecoins, which are often opaque and centralized.

“While Circle made enormous efforts to improve USDC’s transparency (and Tether made some effort over the past year), TUSD, which is relatively unknown today, poses the greatest risk. It offers the least amount of information about its reserve or corporate structure.”

The $3 billion stablecoin TUSD, which is dollar-pegged, was acquired in late 2020 by the little-known Asian conglomerate Techteryx. It also took over its intellectual properties. The company denied being linked to Justin Sun, the founder of Tron. was sued for market manipulation by the U.S. Securities and Exchange Commission.

The Network Firm is a rebranded version of the accounting team that worked with FTX.US, the collapsed crypto exchange’s U.S. entity. The network firm is a rebranded version of the accounting team that worked with FTX.US.

Binance, after clamping down on BUSD in early 2018, decided to promote stablecoins with no-fee trading.

UPDATE: (July 13th, 2023 at 21:33 UTC). Describes Chainlink’s Proof-of-Reserves Technology.

James Rubin is the editor.