- The combined market share of USDT and USDC has dropped to 83.6% as competitors like USDe, PYUSD and bank-backed coins gain ground.
- Ethena’s USDe grew to $14.7 billion, signaling that a new generation of yield-bearing stablecoins is reshaping the market.
- Major banks including ING, UniCredit, JPMorgan and Citi are moving into stablecoins, challenging the long-standing dominance of Tether and Circle.
Tether’s USDT and Circle’s USDC, the two largest stablecoins by market capitalization, are showing signs of losing their long-held dominance in the digital-asset sector.
Although the absolute market capitalizations of both tokens continue to grow, their combined market share has fallen by more than 5% over the past year, indicating a shifting landscape for stablecoins.
Data from DefiLlama and CoinGecko show that the combined share of USDT and USDC among stablecoins declined from 89% a year ago to 83.6% as of October 2025.
Industry analysts say this marks the start of a new phase in which alternative issuers—ranging from startups to established banks—are positioning themselves to challenge the long-standing duopoly.
Decline in USDT and USDC market share
The peak of combined dominance for USDT and USDC occurred in March 2024, when the stablecoin market was roughly $140 billion.
At that time, Tether had about $99 billion outstanding and Circle’s USDC was around $29 billion, together making up 91.6% of the market.
Since then, their dominance has steadily eroded.
By October 2024, USDT and USDC accounted for 89% of the sector; they now represent just 83.6%.
That represents a 5.4% decline over the past year and a 3.4% drop since January.
Nick Carter, partner at Castle Island Ventures, highlighted this trend in a post on X titled “The stablecoin duopoly is ending.”
He attributed the decline to three main factors: increasing competition from intermediaries, a growing race to offer yield-bearing stablecoins to attract users, and shifts in regulatory dynamics following the introduction of the GENIUS Act in the United States.
New stablecoin challengers emerge
Carter noted that several new players have gained traction over the past year, reshaping the stablecoin landscape.
Notable entrants include Sky’s USDS, Ethena’s USDe, PayPal’s PYUSD and World Liberty’s USD1.
Ethena’s USDe was particularly notable, growing to $14.7 billion by offering holders yield sourced from crypto market activity. Carter described USDe as “the biggest success story of the year.”
Other issuers, including Ondo with USDY, Paxos with USDG and Agora with AUSD, have also introduced similar yield-bearing structures.
Despite tougher regulatory scrutiny under the GENIUS Act—especially toward yield-bearing products—Carter believes the trend of offering returns to stablecoin holders is likely to continue.
Meanwhile, Circle is exploring ways to introduce yield features for USDC in partnership with Coinbase, signaling that incumbent issuers may adapt to mounting competitive pressure.
Banks enter the stablecoin arena
In addition to fintech startups, traditional banks and financial institutions are increasingly active in the sector.
Carter suggested that bank-led stablecoin consortiums may have the strongest potential to challenge Tether, since no single bank can scale a stablecoin to global proportions alone.
Recent developments support that view.
In September, Dutch bank ING announced a joint venture with Italy’s UniCredit and seven other European lenders to develop a euro-denominated stablecoin.
The project, built to comply with the EU’s Markets in Crypto-Assets (MiCA) regulation, is expected to launch in the second half of 2026.
In the United States, initiatives involving JPMorgan and Citigroup have also been reported, and Carter predicts such collaborations could meaningfully shift the market’s balance of power.
As competition accelerates, USDT and USDC may retain leading roles, but they will face an increasingly fragmented environment.
This shift represents a critical phase for the industry, where regulatory oversight, yield-related innovation and growing institutional adoption are set to reshape the global stablecoin market.