Tether’s USDT is dominant, but for how long?

With the increasing regulation of Crypto Asset Markets in Europe, questions have arisen as to whether Tether’s USDT stablecoin can maintain its dominance in the long term.

Data from rwa.xyz shows that Tether (USDT) currently dominates the stablecoin market with a 70% share and a market cap of $115.67 billion. However, Tether CEO Paolo Ardoino shared his concerns regarding the recent MiCA regulation that came into effect on June 30.

Stablecoin market data – August 13 | Source: rwa.xyz

Under the new law, stablecoin issuers like Tether and Circle will have to hold 60% of their assets in EU-based banks. While Ardoino believes this puts the stablecoin market at risk, its rival has already become an early adopter.

USD Coin (USDC) issuer Circle has launched its euro-pegged stablecoin EURC on Coinbase’s layer 2 blockchain Base. According to the report, EURC is fully compliant with the MiCA regulation and currently has a market cap of $36.8 million.

Luca Prosperi, co-founder and CEO of M^0 Labs, told crypto.news that USDT’s dominance will depend on its use cases, such as solving retail transactions. He added that “no mature market can expect one issuer to dominate 70% of a market.”

“While we don’t know what the future landscape will be, we expect Tether’s market share to fall to 10-30%.”

Luca Prosperi, co-founder and CEO of M^0 Labs, spoke to crypto.news.

Deenar co-founder Maruf Yusupov told crypto.news that the adoption rate of stablecoins is still insufficient and in very early stages. “Once the asset reaches mainstream adoption, regulatory-compliant stablecoins could outperform Tether in the long run,” he added.

Are stablecoins making money?

One of the main reasons behind the growth of stablecoins is the high market volatility that users turn to them as a safe haven. According to data from rwa.xyz, the total number of stablecoin holders increased by 8.3% in the last 30 days, reaching 114.15 million addresses.

Ethena USDe (USDe) has reached a market cap of $3 billion less than four months after its launch. Ripple has begun testing its RLUSD stablecoin privately on the XRP Ledger and Ethereum. Ripple CEO Brad Garlinghouse has claimed that the stablecoin will likely launch before 2025.

“The winning point for stablecoins continues to be their flexibility, ease of adoption and convenience compared to fiat currencies.”

Deenar co-founder Maruf Yusupov spoke to crypto.news.

However, M^0 Labs’ Prosperi believes that stablecoins “lack a clear standard, transparency metrics, proper regulation, and liquidity aggregation layer.”

“This exposes users and shareholders to significant risks and provides an unfair economic advantage to issuers that are already dominant.”

Luca Prosperi, co-founder and CEO of M^0 Labs, spoke to crypto.news.