cryptoassets regulation

In the wake of recent turmoil among prominent stablecoins, global assets in the sector dropped sharply in May, Fitch Ratings says.

The rating agency reported that global stablecoin assets surged by 15% in the first quarter to US$188 billion. But that gain was erased following news that Terra (the fourth-largest stablecoin by market capitalization) lost its currency peg in mid-May.

As a result, Fitch said, “Global stablecoin assets posted their first sustained and substantial decline,” finishing the month at an estimated US$162 billion.

Despite the drop in assets, the number of stablecoins rose to 100 from 75 at the end of the first quarter, Fitch noted, as new stablecoins enter the market “with aggressive offers and large capitalizations.”

Additionally, it reported that the reserve portfolios that back stablecoins are “generally becoming more conservative.”

The rating agency said it expects that trend to continue, with some stablecoins “adopting a similar risk profile to regulated money market funds.”