Tether (USDT) loses ground on centralized exchanges, down to 74% market share

Even with several high-profile collapses and decoupling events in recent years, stablecoins have continued to capture market share from fiat, increasingly reflecting strong demand. While the stablecoin market is still very concentrated, with Tether’s USDT leading the way, its dominance has been eroding over the past two years.

In fact, Kaiko’s latest data shows a decline in USDT’s market share.

Tether (USDT) is slowly losing market share

By 2024, USDT’s market share on centralized exchanges (CEX) dropped from 82% to 74% according to Kaiko’s estimates.

This could be partly due to increased competition from stablecoins like FDUSD, which benefited from Binance’s zero-fee promotions, in addition to growing demand for regulated options like USDC.

At the end of June, USDC’s market share reached an all-time high of 12%, driven by trading volumes on Binance, Bybit and OKX. High-yielding stablecoins also saw increased interest, with issuers such as Paxos and Tether introducing their own alternatives in the second quarter to meet this demand.

Market Share of Stablecoins. Source: Kaiko USDC sees growing demand

The implementation of MiCA regulation has increased demand for compatible stablecoins, positioning Circle’s USDC as a key beneficiary. The French blockchain analytics firm recently identified the USDC as a leader among regulated stablecoins.

Currently, non-compliant stablecoins make up 88% of the total volume of stablecoins, but this is expected to change significantly due to the European regulation of cryptoasset markets (MiCA), which came into effect on June 30. This regulation is likely to cause market makers to favor compliant stablecoins over their non-compliant counterparts.

In response, major crypto exchanges such as Binance, Bitstamp, Kraken, and OKX have already begun delisting non-compliant stablecoins, including Tether’s USDT, for European users. Kaiko data shows that the share of compliant stablecoins has grown over the past year, reflecting a growing preference for more transparent and regulated options, with USDC emerging as the main winner in this evolving market landscape.

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