Challenges Faced By Winkelvosses and Gemini, Does Crypto Market Need Licensed US-based Alternative to Tether?

Challenges faced By Winkelvosses and Crypto platform Gemini
Uphill battle competing with the 'network effect' of Tether
Gemini lackluster GUSD stablecoin at a $6M market cap
Crytpo and Bitcoin Market Cap Story of Day

Crytpo and Bitcoin Market Cap Story of Day





On Wednesday, Crypto Content Source The Block Published An Article Which Highlighted Challenges Faced By The Winkelvosses And Their Crypto Platform Gemini - Among The Issues Was The Collapse In The Platform's Stablecoin (GUSD) - We See The Bigger Story As The Utter Dominance Of Tether (USDt) Amid The Emergence Of Competitors

One of the largest stories of early 2019 was the emergence of a variety of stablecoins to compete with dominant Tether. These new coins, such as Gemini Dollar (GUSD), True USD (TUSD) and USD Coin (USDC) argued that Tether not being formally regulated and having reserves questioned in the past, was a risky option. While never losing material market share, all three options quickly grew to over 100M in market cap while USDt sat in the $2B range. Since hitting market cap highs in December/January these coin reserves have either flatlined or dropped. As The Block article pointed out, GUSD has been especially decimated, falling from a market cap high of over $100M to just $6M today. Furthermore, Tether has seen aggressive growth in its market cap over the past quarter surpassing $3B in March for the first time and now with reserves over $4B.

Crypto Takeaway & Insights:

#1 It seems, at least for the moment, that the assessment that the market was looking for a formally licensed, US-based alternative to Tether was the wrong product-market fit.

#2 Furthermore, the coins were fighting an uphill battle competing with the 'network effect' of Tether which has become a key component of transferring and trading among exchanges.

#3 In terms of why GUSD has performed particularly poorly, there were stories earlier in the year about Gemini closing trading accounts when they felt clients were taking advantage of their redemption policy. Regardless, it appears that for now Gemini is no longer lending considerable support to GUSD as a $6M market cap implies the Winkelvosses have few of their own assets in the stablecoin.

About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets.