Tether’s new stablecoin, USAT, could pose the first serious challenge to Circle’s (CRCL) USDC in the US market, analysts say — if it can win over institutions.
Launched in partnership with federally chartered bank Anchorage Digital and Cantor Fitzgerald, USAT is Tether’s first attempt at a US-regulated dollar token aimed at institutional users.
Tether’s flagship stablecoin, the $186 billion USDT, dominates global crypto trading and emerging markets. But USAT is entering a more crowded and compliance-driven arena in the US, where Circle has long positioned USDC as the preferred choice for banks, fintechs and exchanges operating under US supervision. USDC has a market cap of $72 billion, less than half of Tether’s USDT, but it grew twice as fast last year.
“I think USAT is a threat to USDC, even though the DNA of Tether and Circle is very different,” said Noelle Acheson, author of the Crypto Is Macro Now newsletter. While Circle has long positioned its token as the stablecoin of choice for regulated financial entities, USAT is clearly built to compete in the same arena, she argued.
“USAT is designed to be institutional grade and seeks to attract clients who would otherwise be happy to use USDC,” she said.
Acheson pointed to several potential benefits: support from Anchorage, partnerships with traditional financial firms such as Cantor Fitzgerald that also provide services for Tether’s USDT, and the potential opportunity to leverage Tether’s global network through conversion with USDT.
She also noted that the involvement of former White House official Bo Hines in the project may ease concerns about Tether’s long-criticized reserve practices. “It could help institutions overcome their reluctance,” she said.
Nicholas Roberts-Huntley, CEO of Blueprint Finance, argued that Tether’s US entry underscores that “the demand for regulated dollar tokens among banks and fintechs is real” after the stablecoin-focused GENIUS Act was signed into law. It also shows that the stablecoin market is “shifting from size and utility to differential regulatory positioning and institutional trust.”
“The USDC has operated without a credible domestic competitor as other participants lacked the scale, distribution or regulatory profiles to challenge their position,” he said. “The launch of USAT could change that.”
Owen Lau, an analyst at ClearStreet, was more cautious.
“It is too early to assess at this stage,” he said. “But I think it poses a risk, but a manageable risk to CRCL/USDC.”
It could also bring risks to Tether as the new token erodes USDT’s existing dominance. “There may even be a cannibalization risk,” he said.
