In brief

  • Tether (USDT) is the most traded cryptocurrency, by a long way.
  • It's market cap ranking is low because it's a stablecoin.
  • Should Tether be recognized for its control over the market?

The US dollar stablecoin Tether (USDT) is the eighth cryptocurrency in the world when ranked by market cap but there’s an argument it should be seen as the biggest coin.

According to data from Messari Pro, Tether now accounts for 48% of all cryptocurrency trading volume. In the last 24 hours, $1.8 billion of USDT traded hands, out of a total of $3.74 billion. In comparison, the number one coin by market cap, Bitcoin (BTC), made up just $1.2 billion.

Messari tracks trading volume from ten of the most reliable exchanges.These exchanges, which Messari refers to as the "Real 10," include Binance, Bitfinex and Coinbase Pro. It does so because of the widespread use of wash trading—where exchanges artificially inflate their trading volumes—suspected to account for up to 95% of the crypto market.

While Tether has the highest amount of trading volume, it is ranked much lower when using market cap as a comparison. This is because, as a stablecoin, its price is pegged to the US dollar. Since market cap is simply a multiplication of price and the circulating supply, it’s much easier for other cryptocurrencies to get a larger market cap—they just have to pump in price.

But Tether is proving itself very valuable in the crypto industry. Its main use is to allow traders to manage the extreme volatility that you see with cryptocurrency prices.

According to a recent CoinDesk report, the cryptocurrency is also favored by OTC traders looking to circumvent China's strict capital controls, which limit how much money can be moved out of the country. In short, Tether makes up a huge portion of the crypto market—and this poses risks for the crypto industry.

“The problem with Tether is not even a debate whether it’s backed by real USD or not, but rather the fact that it’s a centralized system based on trust that can be easily manipulated or shut down by governments, which is completely the opposite to what Satoshi Nakamoto and all early adopters were trying to build,” Sam Aiken, editor of Crypto Punks said, in a Medium post.

And governments are already cracking down on it. The New York Attorney General’s Office (NYAG) is investigating whether the exchange swapped funds from Tether to Bitfinex to make up for a $850 million black hole—as a result of using shady panamanian “bank” Crypto Capital. And that’s not to mention the multiple lawsuits against it.

While Tether may be ranked low down, it’s the top coin in the market—and the number one risk too.