The stablecoin duopoly is ending: new entrants threaten USDC and USDT
Oct 1, 2025
Key Points
- USDC and USDT control 85% of the $245 billion stablecoin market, but commoditized infrastructure now lets banks and credit unions launch competitors to capture yield currently flowing to incumbents.
- Tether's parent company is raising capital at a $500 billion valuation, underscoring the duopoly's profitability even as structural economics prevent any single stablecoin from monopolizing the market.
- Unlike Bitcoin, the stablecoin market lacks monopolistic dynamics because cross-chain interactions and fragmented liquidity create inherent reasons for multiple players to coexist.
Summary
USDC and USDT control roughly 85% of the $245 billion stablecoin market, but that duopoly is fracturing. No competitor has sustained meaningful scale. DAI peaked at $10 billion in early 2022. Terraform USD surged to $18 billion in 2022 but represented only 10% of the market. Binance's BUSD, the most ambitious challenger, peaked at $23 billion and remains a distant third.
Two structural forces are breaking the incumbents' grip. The infrastructure for launching stablecoins is now commoditized. Banks and credit unions can quickly originate stablecoins on-chain, and they have economic incentive to capture the yield currently flowing to Tether and Circle through dollar reserves. Legacy financial institutions are paying attention and likely to move quickly.
Unlike Bitcoin, the stablecoin market does not exhibit monopolistic dynamics. Cross-chain interactions and fragmented liquidity create structural reasons why one player cannot run away with the entire market. The proliferation of stablecoins reflects underlying economics and technical constraints, not just competitive failure by challengers.
Tether's valuations underscore the incumbents' profitability. Tether's parent company is reportedly raising capital at a $500 billion valuation, which would make it more valuable than SpaceX or OpenAI and become the most valuable private company in the world. Tether is also cited as possibly the most profitable company on a per-employee basis. Circle's equity is valued at $30 billion.