Binance Research: Despite Risks, 96% of Institutional Investors Still Use Stablecoins

Binance recently released its latest report "Institutional Market Insights," focusing on the use of stablecoins. The survey results indicate that stablecoins are widely adopted: aside from 4% of respondents, all other institutional investors use at least one type of stablecoin.

Stablecoins pegged to the US dollar are often used as alternatives to fiat currencies, offering advantages such as fast transfers and low fees for trading, deposits, and withdrawals on exchanges.

According to a report, Binance conducted interviews with only 69 large VIP clients and institutional investors. Although the data may not be comprehensive, the scale of this survey is significantly larger than Binance's previous market research efforts.

Tether Dominates

Tether USDT is the most popular stablecoin among Binance users. With a adoption rate of over 40%, respondents cited Tether's high liquidity and large market capitalization as reasons for using it.

Other stablecoins have lower adoption rates, with USDCoin at 19% in second place, followed by TrueUSD and Paxos at 13%. MakerDAO Dai, Gemini USD, StableUSD, and Binance's own Binance USD all have adoption rates below 6%.

Binance noted that compared to fiat-backed stablecoins, users show more interest in exchange-based stablecoins like USDCoin and Binance USD.

However, the adoption rate of Binance USD by Binance is only 3%, a claim that seems to be completely unfounded.

Discrepancies between Market Cap and Adoption Rate

The report suggests that while the overall adoption of stablecoins roughly aligns with their market capitalization rankings, issuing institutions tend to inflate their market cap to attract more users.

This argument may raise concerns about stablecoin issuers, as Tether has often been accused of artificially inflating its market cap through practices like token overissuance. This year, Tether's market cap has surged from $2 billion in January to $4 billion in November.

If Binance's data represents the overall crypto market, the adoption rate and market cap are completely disproportionate. Tether has double the adoption rate of USDCoin, yet its market cap is nine times larger than that of USDCoin.

Regulations Remain Ambiguous

Binance released this report on stablecoins amid regulatory scrutiny. In recent weeks, the Federal Reserve highlighted potential risks to financial stability posed by stablecoins if not properly designed or regulated, such as inability to convert stablecoins into fiat currencies on demand or settle payments on time.

Furthermore, the report also shows that as high as 43% of respondents remain concerned about the ongoing legal issues surrounding Tether. The report states:

Tether remains an indispensable stablecoin in the market but has raised doubts among many market participants regarding its insufficient reserves.

Nevertheless, despite increasing regulatory scrutiny and the ongoing risk of less than 100% reserve backing, institutional investors seem poised to continue using stablecoins.

Related Articles

• Saying Goodbye to the "Kimchi Premium," How Will Bithumb's Global Strategy Play Out?
• Korean Exchange Bithumb Denies Recent Claims of Raid on Shanghai Office

Join now for the most comprehensive fintech information, blockchain updates, and industry examples!