US sanctions against Tornado Cash service increased the use of stablecoins by 33% in one month

The number of transactions in USDC and USDT stablecoins increased by 33% in August as users make transfers in an effort to preserve their savings.

According to analysts at The Block Research, the increase in user activity was caused by the imposition of sanctions on the cryptocurrency mixing service Tornado Cash, as Tether (USDT) did not support the ban on Tornado Cash. It is the refusal to comply with the sanctions restrictions that may have negative consequences for Tether (USDT) in the United States. Therefore, users who had initially transferred their savings from USDC to USDT began to make transfers from USDT to USDC back.

At the end of August, Wall Street Journal analysts said that «Tether's stablecoin is on the brink,» so even a 0.3% drop in the value of its reserve assets could make USDT technically insolvent. As it became known, Tether’s liabilities almost exceed its assets: at the time of writing, Tether has assets worth about $ 67.7 billion and liabilities of $ 67.5 billion, which means a difference of less than $ 200 million. However, the CTO of the stablecoin denies these suspicions.

Regarding the situation with Tornado Cash, the United States has imposed sanctions that prohibit American citizens and businesses from using Tornado Cash services. A few days after the sanctions were imposed, Tornado Cash developer Alexey Pertsev was detained in Amsterdam. The developer was defended by many members of the cryptocurrency community, human rights activists, and co-founder of Ethereum Vitalik Buterin and founder of Cardano Charles Hoskinson. After that, Pertsev was accused of collaborating with the FSB.