2022 was of course the year to forget for the whole of crypto, but stablecoins in particular weren't spared the worst of it. The market capitalization of the stablecoin economy lost over 28 billion U.S. dollars. Crypto winter firms’ closures and bankruptcy didn't help either. And then two weeks after the FX collapse, investors redeemed around 3,5 billion dollars worth of stablecoins that included 2 billion worth of USDT.
On December 4, Mount Gox CEO Mark Karpeles warned that stablecoins may be next in line to face this: “I don't know if it would be next year or later for some issues coming up with stablecoins. That is probably one of them. I don't know which one yet. But the same thing that happened for years is definite at some point: something is going to happen with the centralized exchange, stablecoins are very likely to be next on the line in terms of risk.”
Vladimir Gorbunov, CEO of the decentralized platform Choise.com comments: “I think that the root of this problem was in Luna. And basically not only in Luna, but in USDT, in their stablecoin where there was over 40 billion dollars”.
Despite all this, stablecoins started on a good night this year. Last week, the Universal Digital Payments Network, or EDPN was launched at the World Economic Forum. The network promises to provide interoperability between regulated stablecoins and Central Bank digital currencies. According to its developer, Red Date Technology, multiple global banks will be participating in a use case of crypto concept as safe, stablecoins are still a focus of attention for regulators.
In October last year, US SEC Chair Gary Gensler called for Congress to give the Commodity Futures Trading Commission more power to set the policy of stablecoins. He said this was to reduce risks to the US financial system. Meanwhile, a Philippine Central Bank Official told forecasts: they see the digital asset as key to making payments more efficient.
Gorbunov said he welcomed regulations in this space: “I think that the niche even of crypto bank stablecoins like DAI will be regulated. At least regulators will try to. The thing is how they can manage this sphere. Because USDC for example, or USDT – usual, regular centralized stablecoins are much easier to regulate. You can just look under some balance sheets and the bank accounts and you can create some rules on how they could be managed.”
It seems that it's not all bad for the stablecoin market and unlike couplers Gorbunov is actually optimistic: “It's growing and it's a huge market. Last year the total turnover of stablecoins surpassed Mastercard for example, in the amount of transactions. I think that stablecoin market is still big enough. It has some problems and there were a lot of decreases in the total amount of money that were just withdrawn from the centralized exchanges. But, for example, in the last couple of months, I think that nothing will seriously happen.”
So what will 2023 hold for the stablecoin market then? Gorbunov comments: “I think that 2023 will be first of all the year of at least the beginning of the recovery of the market. Secondly, I think there will be a lot of regulation behind the scenes. And the third thing is that a new market is coming, new companies are coming, for the best time to enter the market is a crypto winter. The best time to start your business’ increase is also a crypto winter because you won't have so many competitors on those things.”
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