Tether’s $181B Paradox: USDT Growth Amid Market Share Decline

Between November 2024 and October 2025, Tether’s USDT witnessed a notable decline in market dominance, falling from 70% to 59.9% – marking the second sub-60% reading within a single year. Simultaneously, Circle’s USDC climbed from 20.5% to 25.3% market share over the same period. This shift coincided directly with the phased implementation of Europe’s Markets in Crypto-Assets (MiCA) regulation, which began with stablecoin-specific provisions in June 2024 and expanded to broader crypto-asset service provider requirements by December 2024.

European regulators instructed platforms to halt offerings of non-compliant stablecoins immediately, though the European Securities and Markets Authority (ESMA) granted a sell-only wind-down window through the end of the first quarter to prevent user disruption. Major European exchanges responded by delisting or restricting USDT trading pairs ahead of the April 2025 deadline, creating regional pressure that nudged market share toward compliant alternatives like USDC. This regulatory environment forced Tether to acknowledge the headwinds while maintaining its global position.

Filippo Armani, data researcher at Dune, frames USDT’s dominance decline as primarily mathematical rather than existential. In his analysis shared with CryptoSlate, he explained: ‘The pie expanded faster via USDC and USDe while USDT still grew strongly in absolute terms.’ The numbers substantiate this perspective – Tether’s supply surged from $89.1 billion in November 2023 to $133.9 billion by November 2024 and reached $180.9 billion by October 2025.

During the same period, USDC vaulted from $24.3 billion to $76.3 billion, while Ethena’s USDe emerged from near-zero to $12.2 billion. Armani acknowledged that MiCA’s stablecoin rules pushed major venues to curb or delist USDT pairs by April 2025, shifting share toward compliant alternatives. However, he emphasized this movement represents a regional dynamic rather than evidence of shrinking global USDT demand. The nearly $50 billion supply increase between November 2024 and October 2025, despite percentage share contraction, demonstrates USDT’s continued strength in global markets.

Tether responded to European regulatory pressures through strategic investments rather than direct product modification. On December 17, 2024, the company invested in StablR, a Malta-licensed electronic money institution, mirroring an earlier investment in Quantoz – another MiCA-aligned issuer backed by Tether’s Hadron platform. Both platforms operate under Electronic Money Institution licenses that satisfy MiCA requirements, allowing European venues to list their tokens without regulatory exposure.

Armani expects this strategy to boost ‘Tether-ecosystem share in the EU, not necessarily USDT’s own dominance,’ since separate tickers prevent direct attribution to Tether’s flagship product. The company also telegraphed broader ambitions through USAT, a planned US-regulated stablecoin designed for GENIUS Act compliance. Armani views the domestic launch as a mechanism to ‘reclaim share stateside once live,’ particularly among institutional buyers prioritizing regulatory clarity.

Nikolaos Kostopoulos, blockchain senior consultant at Netcompany SEE & EUI, sees MiCA’s impact as geographically bounded. ‘While MiCA has undoubtedly constrained USDT’s footprint in Europe, its overall impact on Tether’s global dominance remains limited,’ he stated. ‘USDT continues to thrive in offshore and emerging markets beyond the EU perimeter, where regulatory arbitrage still exists.’

Kostopoulos views Tether’s EU-focused subsidiaries as unlikely to reverse the dominance slide, noting that exchanges and institutional players from the eurozone are already focusing on a new, fully regulated stablecoin based on the euro, driven by nine European banks. He identified more structural drivers ahead lying ‘not within MiCA itself, but in new entrants such as World Liberty Financial’s stablecoin and the broader political and commercial interests shaping the next generation of stablecoins.’

The stablecoin competitive landscape extends far beyond regulatory compliance considerations. Traditional finance institutions are preparing their own stablecoin launches with built-in banking relationships and institutional trust. Stripe unveiled a platform to fast-track the creation of stablecoins, while Visa plans to help banks issue their own tokenized fiat currencies, with many other major players joining the movement.

Tether’s diversification efforts include Tether Gold (XAUT), which reached $1.6 billion in market capitalization, and the company’s Plasma Layer-1 integration enabling zero-fee USDT transfers and yields exceeding 10% through partner neobanks. Despite these innovations, the fundamental question remains whether Tether’s investments in compliant subsidiaries and US-focused products can effectively compete for institutional flows against entities structured for regulatory environments from inception.

Tether’s remarkable absolute growth – doubling supply in two years from $89.1 billion to $180.9 billion – demonstrates durable demand outside regulated markets and illustrates how regional dynamics alone cannot curb USDT’s global expansion. The paradox of growing absolute supply amid declining market share reveals a stablecoin market in transition, where regulatory compliance and global accessibility represent competing priorities in an increasingly fragmented ecosystem.