- Tether and Circle control 90% of the stablecoin market.
- An unsustainable business model will erode this chokehold, said Robert Le of Pitchbook.
- Financial firms are increasingly muscling into crypto.
Traditional finance giants are staring down the $235 billion stablecoin market — and getting ready to take over.
That’s according to Robert Le, senior analyst at venture capital research firm Pitchbook.
Although Tether and Circle command more than 90% of the stablecoin market, Le expects that figure to deteriorate as major banks, asset managers, and fintechs enter the market.
What will drive this erosion? An unsustainable business model, he said.
“They’re essentially printing billions of dollars, getting cash upfront, and keeping 100% of the interest through money market funds,” Le told DL News.
“That model is going to erode as competition increases.”
‘Thousands of stablecoins’
Just two key players dominate the $235 billion stablecoin market.
Tether’s USDT enjoys a whopping $143 billion market value and processes more volume in 24 hours than Bitcoin. Circle’s stablecoin offering, USDC, boasts another $58 billion market valuation.
But competition is starting to mount.
PayPal’s PYUSD has already accumulated $700 million in market value since its 2023 launch, while Bank of America CEO Brian Moynihan said it was “pretty clear” they will eventually issue a stablecoin once clearer regulations are hammered out in Washington D.C.
Le said that once a stablecoin bill gets inked, “we’ll see hundreds if not thousands of stablecoins enter the market.”
Stablecoins have taken centre stage in finance, and there’s plenty at stake.
The stablecoin market processed over $15.6 trillion in volume in 2024 — more than Visa and Mastercard — according to data from investment firm Ark Invest.
The analysis adds to a growing chorus of market watchers who predict that traditional financial firms and newer fintechs who are expanding their crypto services, such as Robinhood, will be able to leverage their brand recognition and established regulatory compliance to take market share from native crypto firms.
Regulatory tailwinds
A lot is riding on stablecoin legislation, said Le.
In the US, two stablecoin bills are inching through Capitol Hill.
“Stablecoin legislation is on the move,” Jake Chervinsky, a Blockchain Association board member, said on X. “There are still some details to work out but Congress is serious about this, both the House and Senate.”
Democrats aren’t happy about the bill, however.
One bill, dubbed the Stable Act, “tears down the wall that was used to separate banking from commerce,” said Representative Maxine Waters, the ranking Democrat on the House Financial Services Committee, during a hearing this week.
Stablecoin legislation is on the move.
— Jake Chervinsky (@jchervinsky) March 11, 2025
There are still some details to work out but Congress is serious about this, both House and Senate.
Stablecoins are the gateway drug for crypto. Once TradFi goes onchain, it never goes back.
Love to see it. Let's get it done, folks!
The Genius Act has also threatened Tether by pushing for stricter reporting rules if the firm wants to keep servicing US customers. It’s a level of scrutiny Tether has never faced before.
By contrast, Circle has been audited by Deloitte since 2022 and, based in New York, it already complies with a slew of state and federal financial regulations.
Regulations have been taking shape elsewhere, too.
The European Union approved 10 stablecoin issuers under MiCA, the 27-nation bloc’s new crypto regulatory regime.
Tether has opted out of the European market and shunned compliance with MiCA.
In a lengthy post on X earlier in February, Tether CEO Paolo Ardoino lashed out at unnamed rivals.
“I’ll leave it to you to define a competitor trying to use lawfare to kill an opponent, instead of focusing on better products,” he wrote. It’s unclear what he was referring to.
Incumbents tremble
Even so, things aren’t looking rosy for incumbents.
While Tether’s USDT will grow alongside the broader crypto market, its market share won’t be able to keep up with the competition, argues Le.
“Distribution is the key component that will determine winners in this space,” he told DL News. “When institutions come on board, they likely won’t want to use Tether, and many may hesitate with Circle as well.”
Circle and Tether didn’t immediately respond to requests for comment on this story.
Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.