Tether Holdings Ltd, the issuer of the largest stablecoin, Tether (USDT), reported that its full marketplace capitalization had crossed $64 billion for the first time in history.

The company called the event a "milestone," adding that it is some other indication of the cryptocurrency market's "continued trust and confidence" in its stablecoin.

In item, Tether's business model revolves around providing digitized dollars to cryptocurrency traders and investors. In doing and so, the visitor offers them a manner to park their volatile digital assets into USDT, a digital asset that maintains a i-to-one peg to the United States dollar.

Every bit a event, Tether assists crypto traders and investors cutting through the hassle of transferring their digital nugget sale proceeds to a bank account.

The visitor's business model has secured itself in the crypto manufacture, insomuch that trades between Bitcoin (BTC) and USDT are typically twice as frequent as trades between Bitcoin and the U.South. dollar.

Signaling crypto demand

Tether officials have earlier clarified that its fresh USDT issuances take identify to meet orders from customers.

Therefore, a rising USDT market cap indicates that traders and investors may desire to buy the stablecoin and deploy it to purchase digital assets such as Bitcoin and Ether (ETH) and/or put them into yield farming contracts to earn annualized returns.

A rise Tether issuance rate typically coincides with spikes in the Bitcoin market place. For instance, the total market place cap of USDT was around $4 billion in March 2022 but rose to over $61 billion in May 2022. The same menstruum witnessed Bitcoin rising from below $4,000 to near $65,000.

Bitcoin price versus USDT issuance. Source: LongHash

Moreover, Bitcoin'due south correction from $65,000 to $30,000 coincided with a flat Tether market cap.

Afterwards, BTC recovered on new endorsements from Tesla'south Elon Musk and Twitter's Jack Dorsey and fears of higher inflation led past the U.S. Federal Reserve's loose monetary policies.

Meanwhile, Glassnode data reports that 20% of Tether's supply is currently locked in decentralized finance projects' smart contracts.

USDT supply in smart contracts (pinkish) vs. rival USDC (dark-green). Source: Glassnode

"I foresee Tether standing to nigh 'print' (mint) more and more Tether as the crypto industry continues to grow," Gustavo De La Torre, business development manager at N.exchange, said, hinting at a potential market boom that may follow in the sessions alee.

"The growing supply indicates that the crypto ecosystem believes in its own system, carving out a means to peg trading pairs with an nugget other than the The states dollar."

Commercial holdings

In June, JPMorgan Chase analysts noted that Tether'due south big commercial paper holdings show that banks are unwilling to take the company'due south cash. That could be due to the U.Due south. Function of the Comptroller of the Currency'south guideline that orders banks to work with only stablecoin issuers whose coins are 100% backed by reserves.

Tether reserve allocations from May report. Source: Tether

The banking giant added that providing Tether banking services would "likely raise reputational risk concerns" for fiscal institutions. Still, Stuart Hoegner, full general counsel at Tether, rubbished JPMorgan's outlook, stating:

"With respect to reputation, we believe we are seeing the opposite: more and more counterparties are comfortable with Tether and our transparency initiatives and are keen to work with us."

Regulation sentinel

Tether's $64-billion "milestone" also appears as stablecoins, in general, attract more intense scrutiny from regulators.

The U.S. Treasury Section, the Securities and Exchange Committee and the Federal Reserve have expressed their concerns about the potential of dollar-pegged digital assets to cause global financial instability and obscure transactions associated with money launderers and other online criminals.

Related: SEC Chairman says cryptocurrency falls nether security-based swaps rules

But to De La Torre, crypto traders have ignored regulatory threats over stablecoins' feasibility as a product. He said:

"Should regulatory pressure heighten, other well regulated stablecoins similar USDC may boss American markets, nonetheless, Tether will still be relevant in other regions of the world."

Bob Reid, CEO and co-founder of Everest, also highlighted Circle's USD Coin attempt to mousetrap the U.Due south. market past attempting to get a national banking lease. The executive noted that Tether might follow a similar path to gain legitimacy in the U.S. or be ousted from the country altogether.

"Tether risks befalling in the same mode as Binance, a shunned nomad with half the governments of the earth hating them," he told Cointelegraph.

The views and opinions expressed here are solely those of the author and exercise not necessarily reverberate the views of Cointelegraph.com. Every investment and trading movement involves risk, y'all should conduct your own enquiry when making a decision.