Tether, Circle Face Growing Bank Competition Amid Stablecoin Market Shift
New regulations in the U.S. and Europe could make them more viable but also pose challenges for issuers like Tether and Circle, which currently dominate the market.
Regulatory Pressures on Tether and Circle
A PitchBook report shows the top 10 stablecoins now hold a combined $220 billion market cap—double that of two years ago. Tether leads with 65%, while USDC holds 25%. Fiat-backed stablecoins make up 95% of the total supply, but analyst Robert Le warns of centralization risks.
“Issuers like Tether and Circle control minting and burning, raising concerns about governance and regulatory intervention,” Le noted. He warned that regulators could freeze funds or restrict redemptions, affecting holders.
New Rules Could Reshape the Market
Several U.S. bills—FIT21, GENIUS, and STABLE—aim to regulate stablecoins, requiring higher reserves, audits, and transparency. The EU’s MiCA laws already impose strict banking-like standards, prompting Tether to exit the European market.
Traditional Finance Enters the Stablecoin Space
Stablecoins processed $15.6 trillion in transactions in 2024—more than Visa and Mastercard combined—despite having far fewer transactions. This suggests stablecoin payments are of significantly higher value per transaction.
Major banks like BBVA, Standard Chartered, and Bank of America are exploring stablecoins, while PayPal has launched PYUSD. Visa is developing a stablecoin issuance platform, and investment firms like BlackRock and Fidelity are offering tokenized money market funds as direct competitors to USDT and USDC.
According to PitchBook, stablecoins will continue growing, but only a handful of trusted, regulated issuers will dominate the market.
Editorial Team
Reporter at Coindoo
