Looking at USDT and USDC’s market value today, you can fool into thinking they are undeniable. With Tether and Circle, which controls over 80% of the global stablecoin value after market capital from October 2025, most other crypto-native challengers have not yet set a convincing battle, despite many offering compelling value proposals for both users and distribution platforms. To date, a cryptic trial market, lack of legislative clarity, first-mover benefits and strong integrations with on- and off-ramps has enabled enormous value creation for tether and circle.
StableCOin Summer (an expression to describe the boom that is in demand, legislative clarity and market participants in recent months) have begun to expose some very real challenges to what many consider de facto stableecoins. Obviously, the couple has felt the pressure to respond: a number of well-associated executive employment and regulated launches in Europe (EURC) and the US (USA ₮) have proven that they understand the need to change and adapt to maintain dominance or at least continue to grow. But an important question is back: Will this be enough to maintain their lead over the package?
Ecosystem competition
StableCOin use Today has been driven by decentralized financing uses (DEFI), including trade, lending, stake, yield agriculture and liquidity. Another significant component is derived from strong demand for cross-border payments, savings and general access to dollars in economies with unstable or limited Fiat currencies.
Large centralized exchanges have served as Kingmakers for Tether and Circle and play the important role of on and off-ramps required to bring global demand into and out of the system. There is no doubt that without Coinbase, USDC (launched four years after USDT) would not enjoy the position it has today. You don’t have to look longer than Coinbases 50% share of Circle’s USDC Reserve revenue to understand the dynamics. BitFinex and Tether’s relationship are slightly different, but share similarities, and exchanges such as Binance providing support have enabled Tether’s success.
However, a recent wave of new participants, such as USDG (PAXOS) and USDE (ETAA), has shown that participants are willing to come in by offering easier ways for users to earn dividends on their inventory. In a relatively homogeneous product, this is one of the main value drivers for users. Take, for example, USD’s recent messages: Integrations with Bybit and Binance have made it easier for users to earn rewards along with deeper product integration – namely to give users benefits on funds parked on the platform or held as security. USDG, as part of Global Dollar Network, has done pretty much the same thing.
Recently, Hyperliquid (a decentralized exchange operating on their own LAG-1 blockchain) announced the launch of their own native, compatible stableecoin, USDH, in partnership with native markets. Before this, Hyperliquid saw incredible volume growth and jumped to over $ 330B on site and eternal trading volume in July 2025 and briefly surpassed Robinhood. As a result of this, they have $ 5.97B USDC deposits on platform – almost 10% of the total circulating supply. The move to their own stableecoin signaled clearly that larger ecosystem players will have on the action; Without any agreement in place, these players would not receive any of the interest income generated by Circle from the reserves supporting USDC. In Hyperliquid’s case, assuming a conservative return of 4%, the opportunity could represent up to $ 240 million. In annual revenue if they could convert all USDC platform to their own stableecoin.
As a direct response to the news, Circle, in an attempt to defend their market and income share, launched its own original version of USDC at Hyperevm. The move aims to elaborate on USDC integration in Hyperliquid’s ecosystem by allowing trouble-free transfers over a dozen network via Circle’s Cross-Chain Transfer Protocol. Alongside this, they announced an investment by buying $ hype -tokens, the native tools and the governance token for the hyperliquid ecosystem.
In a similar way, Ethena’s recent USDE message with Binance presents a challenge to bind. Following Binance -listed USDE, Børsen has added USDE trading pair along with an integration with Binance’s Earn program. Like USDC and Coinbase, Binance users in certain jurisdictions will now be able to earn rewards on the stableecoins they have on the platform, including in the portfolio margin of futures and eternal trade. The move along with an attractive incentive offer (12% April for a limited period) has seen USDE on platform Skyrocket for over $ 2B. At the same time, USDE’s market capital crossed $ 14B, up from $ 6B in January this year.
This follows a number of growth initiatives from the third largest stableecoin after market capital; USDE -Use exceeded USDC on BYBIT following a similar integration message. These examples are also far from exhaustive. Other players, such as USDG, a stableecoin issued by Paxos, have also tried to integrate with other key exchanges and players with the same goal to earn market share from Tether and Circle by breaking down the value chain and distributing several of the interest income earned on reserves.
From January 1, 2025, USDT and USDC collected for 88% of the total stablecoin market capital, valued at $ 181 billion. Ten months later, the total market had increased by more than 50% – from $ 205 billion to $ 313 billion per year. October 9. However, USDT and USDC’s total market share fell to approx. 82%. Although this fall may appear modest, it marks a clear sign that competition is intensifying and new participants are beginning to erode the dominance of the two established companies.
Legislative and other challenges
The two established companies have not only seen headwinds from industry players. Recent regulatory updates have also brought assembly challenges. The EU recently rolled out, their extensive crypto frame that regulates crypto assets, their providers and other ecosystem participants. Tether published a final message: They would not comply with the regulation, considered as restrictive and dangerous according to their CEO. As a result, it was delisted from centralized exchanges that provided vital on and off ramps. Circle, though in a stronger position thanks to its Mica compliance, was also not untouched. According to the regulation, USDC and other stableecoins are classified as e-money-tokens (EMTs); It cannot legally pay dividends to holders in the EU, which potentially affects its value for users in venues that previously offer rewards.
Fortunately for Tether, the fact is that Europe is a relatively small proportion of their total market, with most of USDT’s volumes derived from Asia and other non-Western markets. Circle also then a slightly muted effect, considering that all stableecoins fall under the same requirement-what means, unless kept on-chain, no user would be able to receive reward payments. However, this generally reduces the value of stableecoin’s versus other traditional ways of keeping cash.
The genius action in the United States is likely to move the market in about the same way. As it stands, Tether’s USDT is non-compatible and will follow the same deterrents that have marked its EU-centralized exit. StableCoins will also not be able to directly pay interest holders of interest, and although they are currently exempt, lobbies also the banks for reward programs to be included in the ban. No surprise in view of the potential for deposit flights due to the significantly higher return offered through these stablecoin programs.
Tether has reacted by launching the US ₮, their new US-compatible offerings to be issued by Anchorage Digital and led by the White House Crypto Sherpa Bo Hines as CEO. The move was measured; Tether chose to maintain support for the very profitable, offshore structured, non -American and -eu -compatible usd and add the US ₮ as the complementary regulated product.
While rewarding programs remain in the air with banks that lobby against them, Circle and other issuers in the United States are facing the threat of these same banks and other institutions entering the current race under the genius law. Institutions including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, are planning everyone actively or exploring stableCOin initiatives in which Bank of America and Citigroup confirm plans to launch their own US Dollar-Stable StableCoins. Fintech Giants also enters the action, with PayPal, Revolut and Robinhood are all ready to launch their own symbols.
Conclusion
The dominance of Tether and Circle, once seen as unwavering, is now facing its most formidable test. What was once a two-horse race evolves into a crowded, complex ecosystem of challengers, each utilizing new technologies, integrations and regulatory openings to win market share. The emergence of natively integrated stablecoiner such as USDE and USDH – coupled with increasing pressure from regulators and the threatening entry of banking and fintech giants – suggests that the next phase of the stableecoin market will be defined by fragmentation, innovation and power insurance.
Tether and circle are not blind to the changing tides. Strategic partnerships, regulatory rotation points and technical integrations show a willingness to adapt, but whether this will be enough to see. Their future will not only depend on scale and discrepancy, but on how effectively they develop to meet user requirements in an increasingly competitive and regulated environment.
As the market matures, the very definition of a “dominant” stableecoin can change. In this new landscape, success can be less on being first and more about being the most adaptable.
