The stablecoin sector, currently valued at a hefty $270 billion, has seen a remarkable rise over the past few years. However, it still represents less than 8% of the total cryptocurrency market cap, maintaining this level since 2020. A fresh analysis from JPMorgan suggests that the upcoming wave of U.S. stablecoin launches could morph into a zero-sum game—unless the broader crypto market experiences substantial growth.
Tether’s Strategic Move
Tether, known for its widely-used stablecoin USDT, is primarily popular overseas. Now, it’s planning to introduce a new player to the U.S. market: the USAT, a token that will be fully compliant with U.S. regulatory standards. While USDT’s reserves are about 80% aligned with U.S. requirements, USAT promises to meet these standards entirely, a move that could significantly alter the competitive landscape.
Stablecoins, which tie their value to assets like the U.S. dollar or gold, are indispensable in the crypto ecosystem. They provide essential payment infrastructure and facilitate international money transfers. In this arena, Tether’s USDT is the reigning champ, trailed by Circle’s USDC.
A New Regulatory Era
The recent passage of U.S. stablecoin legislation in July has already ignited a spate of new launches, all eyeing Circle’s USDC, which currently dominates the U.S. market. According to the JPMorgan report, these new entrants are hustling for a foothold before regulatory measures take full effect. However, analysts caution that the stablecoin market’s growth is inextricably linked to the overall expansion of the cryptocurrency market cap.
Circle is facing increasing competition from firms like Hyperliquid, whose exchange alone accounts for nearly 7.5% of USDC usage. Moreover, fintech titans such as PayPal, Robinhood, and Revolut are making aggressive entries with their own tokens, seeking a slice of the stablecoin pie.
Circle’s Countermeasures
In response to these mounting pressures, Circle is innovating with Arc, a blockchain specifically designed for USDC transactions. Arc aims to enhance transaction speed, security, and interoperability to ensure USDC remains integral to the crypto infrastructure. Despite these efforts, the report from JPMorgan suggests that without a significant market expansion, this new wave of stablecoin rivalry might merely shuffle existing market shares rather than enlarge the market.
Interestingly, USDC’s supply has already surged to $72.5 billion, surpassing Wall Street firm Bernstein’s 2025 estimates by 25%. This growth trajectory is noteworthy, particularly in light of the competitive challenges USDC faces. Analysts from Bernstein have described Circle’s market share expansion as being “on a tear,” highlighting the dynamic and rapidly evolving nature of the stablecoin sector.
The Future of Stablecoins
As the stablecoin landscape continues to evolve, the crucial question remains: can the market grow beyond its current confines, or will it simply redistribute existing shares among old and new players? The answer largely hinges on the broader cryptocurrency market’s ability to expand and integrate stablecoins more deeply into global financial systems.
For now, the race is on. Both established giants like Tether and emerging competitors are vying for dominance in a market poised on the brink of transformation. Whether this competition leads to a zero-sum game or a more expansive market remains to be seen, but one thing is clear: the stakes have never been higher.
In the coming months, all eyes will be on regulatory developments, technological innovations, and market responses as the stablecoin sector navigates this pivotal moment. As industry observers keenly watch these unfolding dynamics, the implications for the future of digital currencies are profound, promising both challenges and opportunities for the players involved.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
