The Unwavering Dominance of Tether and Circle Faces Its Toughest Challenge

A glance at the current market capitalization of USDT and USDC may lead one to believe that their dominance is unassailable. However, with Tether and Circle commanding over 80% of the global stablecoin market by capitalization as of October 2025, other crypto-native challengers have yet to pose a significant threat, despite offering attractive value propositions for users and distribution platforms. The crypto-centric market, lack of regulatory clarity, first-mover advantages, and robust integrations with on- and off-ramps have enabled substantial value creation for Tether and Circle. The recent 'Stablecoin Summer' has exposed real challenges for the de facto stablecoins, prompting a spate of high-profile executive hires and regulated launches in Europe and the US. But the question remains: will these efforts be sufficient to maintain their lead? The ecosystem is becoming increasingly competitive, driven by decentralized finance applications and cross-border payments. Large centralized exchanges have played a crucial role in supporting Tether and Circle, but new entrants like USDG and USDe are now offering easier ways for users to earn yields on their holdings. Recent announcements, such as USDe's integration with Bybit and Binance, have made it easier for users to earn rewards, signaling a shift in the market. Hyperliquid's launch of its native stablecoin, USDH, in partnership with Native Markets, is another example of major ecosystem players entering the fray. In response, Circle has launched its own native version of USDC on HyperEVM, aiming to deepen USDC integration into Hyperliquid's ecosystem. The move to issue native stablecoins clearly indicates that major players want a share of the interest revenue generated by Circle from the reserves backing USDC. The recent growth initiatives from USDe, including its integration with Binance, have seen its market cap surge, posing a challenge to Tether. As of January 1, 2025, USDT and USDC collectively accounted for 88% of the total stablecoin market cap, valued at $181 billion. However, their combined market share has declined to roughly 82%, marking a clear sign that competition is intensifying. Regulatory updates have also brought challenges, with the EU's MiCA framework regulating crypto assets and the US's GENIUS Act likely to impact the market. Tether's non-compliance with MiCA has led to delistings from centralized exchanges, while Circle's compliance has mitigated the effect. The GENIUS Act is expected to move the market in a similar way, with Tether launching a US-compliant offering, USA₮. The threat of banks and fintech giants entering the stablecoin market is also looming, with institutions like Bank of America and Citigroup planning to launch their own stablecoins. The dominance of Tether and Circle is facing its most significant test yet, with the rise of natively integrated stablecoins, regulatory pressure, and the entry of new players. Their future will depend on their ability to adapt to the changing landscape and meet user demands in an increasingly competitive and regulated environment. As the market matures, the definition of a 'dominant' stablecoin may change, with success hinging on adaptability rather than being first to market.