Centralized stablecoins dominate cryptocurrency trading, but recent turbulence has showcased that markets heavily rely on stablecoins that lack transparency of their reserves with TrueUSD posing the biggest risk, digital asset market research firm Kaiko said in a report.

As of Thursday, 74% of all transactions on centralized crypto exchanges involved stablecoins, while only 23% incorporated fiat currencies, Kaiko data shows.

Trading volume of TrueUSD (TUSD), which has lately fallen under scrutiny due to the implosion of banking partner Prime Trust and disruptions in its reserve reporting, has grown dramatically to 19% from less than 1% in three months. Tether’s USDT, which was partially backed by Chinese commercial papers in the past, claimed a 70% share of volumes.

Stablecoins – cryptocurrencies that peg their price to another asset, predominantly to the U.S. dollar – have become a key piece of plumbing for the crypto ecosystem, facilitating trading and onboarding from government-issued fiat currencies. The asset class has a combined market capitalization of $128 billion, per CCData.

The largest stablecoins have all endured periods of turmoil in the last few months. In February, New York state regulators ordered Paxos to halt minting Binance USD (BUSD), the third largest stablecoin at the time. Next month, the collapse of Silicon Valley Bank (SVB) temporarily froze a sizable portion of USDC’s cash reserves, which affected Maker’s DAI stablecoin. Last month, USDT endured sell pressure in a key stablecoin liquidity pool, spooking traders, and TUSD weathered the implosion of its custodial partner.

These volatile periods highlighted how crypto markets are exposed to risks and vulnerabilities of stablecoins, Clara Medalie, head of research at Kaiko, noted.

“Crypto markets are highly dependent on centralized stablecoins that often lack transparency around reserves,” she said.

“While Circle has made huge efforts to improve USDC transparency (and even Tether has made some efforts over the past year), the relatively unknown TUSD is today posing the biggest risk, offering the least information about its reserves or corporate structure.”

The $3 billion TUSD is a dollar-pegged stablecoin that was acquired by a little-known Asian conglomerate Techteryx in late 2020, taking over its intellectual property. The firm denied reports about being connected to Tron founder Justin Sun, sued by the U.S. Securities and Exchange Commission (SEC) for market manipulation.

TUSD is backed by fiat assets, according to Chainlink’s – somewhat lackluster – proof-of-reserves technology. The Network Firm, which provides attestations about reserves, is a rebranded version of the accounting team working with FTX.US, the collapsed crypto exchange’s U.S. entity.

The token’s rapid rise followed Binance’s decision to promote the stablecoin with zero-fee trading on its platform after the clampdown on BUSD earlier this year.