Tether loses ground, market share shrinks to 74%

The market share of Tether’s USDT stablecoin on centralized exchanges (CEX) has fallen from 82% to 74% so far this year.

This decline in dominance highlights the increasing competition in the stablecoin market and the potential regulatory challenges Tether may face.

EU regulations and new competitors

Despite the decline in market share, Tether (USDT) remains the most widely used stablecoin with a market capitalization of over $100 billion. Tether’s popularity stems from its ability to provide a stable, fiat-backed digital currency that facilitates seamless transactions and trading within the crypto ecosystem.

The Kaiko Analytics report notes that Tether’s decline in market share comes as the European Union prepares to implement its new Markets in Crypto Assets (MiCA) regulation, which is expected to impact stablecoins like USDT.

MiCA will restrict the sale of stablecoins to EU investors, which could lead exchanges like Kraken to reconsider their support for USDT.

Tether CEO Paolo Ardoino also expressed concerns about some aspects of MiCA’s requirements, stating that the company does not plan to be regulated under the new rules in the medium term.

This regulatory uncertainty could further erode Tether’s market share as exchanges and users turn to alternative stablecoins that better align with emerging regulatory frameworks.

The report notes that the stablecoin market is diversifying, with prominent alternatives such as Circle’s USDC gaining traction.

Tether to Suspend USDT Buybacks

On July 11, Tether announced its plan to suspend USDT buybacks across its various blockchain networks. The company stated that this decision is aimed at ensuring the long-term sustainability of the USDT ecosystem.

Tether will be gradually phase out USDT support across multiple networks over the coming months. Specific timelines will be provided for each network separately to facilitate a smooth transition for users.

This strategic move is part of Tether’s effort to simplify operations and focus on the most widely adopted blockchain networks. By pausing USDT buybacks on less active networks, Tether aims to improve the overall user experience and maintain the stability of the USDT peg.

In other news, DWS, a leading European investment firm, has established a new entity to launch Germany’s first nationally regulated cryptocurrency. The firm aims to launch a euro-based stablecoin compliant with Germany’s financial regulator BaFin by 2025.

Additionally, Tron (TRX) founder Justin Sun announced that he plans to launch a free stablecoin that could revolutionize the stablecoin market if successfully implemented.

The stablecoin market continues to grow with significant contributions from companies like Coinbase and Circle. Coinbase relies on stablecoin revenue, while Circle’s approval to operate in Europe is an important step towards becoming a global standard in the industry.