- USDT and USDC fall to a 83.6% market share as rivals such as USDe, PYUSD and bank-backed coins gain ground.
- Ethenas USDe rises to $14.7 billion, highlighting how new yield-bearing stablecoins are reshaping the market.
- ING, UniCredit, JPMorgan and Citi enter the stablecoin space, challenging the 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 both tokens have grown in absolute market value, their combined share of the stablecoin market has declined by more than 5% over the past year, signaling a shifting landscape for stablecoins.
Data from DefiLlama and CoinGecko show USDT and USDC’s share of the stablecoin market dropping from 89% a year ago to 83.6% in October 2025.
Industry analysts say this marks the start of a new phase in which alternative issuers — including startups and banks — are positioning themselves to challenge the longstanding duopoly.
USDT and USDC Market Share Declines
The combined peak dominance of USDT and USDC occurred in March 2024, when the stablecoin market was valued at $140 billion.
At that time, Tether had about $99 billion in circulation and Circle’s USDC accounted for $29 billion, together representing 91.6% of the market.
Since then, that dominance has steadily eroded.
In October 2024, USDT and USDC made up 89% of the sector; they now account for just 83.6%.
That represents a decline of 5.4% over the past year and a 3.4% drop since January.
Nic Carter, partner at Castle Island Ventures, highlighted the trend in a post on X titled “Stablecoin duopoly ends.”
He attributed the decline to three main factors: competition from intermediaries, an intensified race to attract users with yield-bearing stablecoins, and changing regulatory dynamics following the introduction of the U.S. GENIUS Act.
New Stablecoin Challengers Emerge
Carter noted several new entrants have gained momentum over the last year and are reshaping the stablecoin landscape.
Notable examples include Skys’ USDS, Ethenas’ USDe, PayPal’s PYUSD and World Liberty’s USD1.
Ethenas’ USDe has been particularly notable, growing to a supply of $14.7 billion by offering holders yields derived from crypto-native trading activities. Carter described USDe as “this year’s biggest success story.”
Other issuers, including Ondo with USDY, Paxos with USDG and Agora with AUSD, are also entering the market with similar yield-bearing structures.
Even though regulatory scrutiny has increased under the GENIUS Act, particularly around yield products, Carter believes the trend of offering yields to stablecoin holders will continue.
At the same time, Circle is exploring ways to introduce yield features for USDC in partnership with Coinbase, signaling that established issuers may adapt to competitive pressure.
Banks Enter the Stablecoin Arena
Beyond fintech startups, traditional banks and financial institutions are also moving into the sector.
Carter suggested that bank-led stablecoin consortia have the strongest potential to compete with Tether, since no single bank has the reach to scale a major stablecoin 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 build a euro-denominated stablecoin.
The project, designed to comply with the EU’s Markets in Crypto-Assets (MiCA) regulation, is expected to launch in the second half of 2026.
In the U.S., reports have surfaced of a stablecoin initiative involving JPMorgan and Citigroup, and Carter predicts such collaborations could fundamentally alter the market’s power balance.
As competition accelerates, USDT and USDC may retain leading positions but face an increasingly fragmented environment.
The shift marks a critical phase for the industry, where regulatory oversight, yield innovation and institutional adoption will reshape the global stablecoin market.