6-4-2025 – In a year that financial experts are boldly calling “the era of the stablecoin,” 2025 is witnessing an unprecedented rise in these digital assets worldwide. With a crypto-friendly administration now steering the United States, stablecoins—cryptocurrencies pegged to stable assets like the U.S. dollar—are no longer a niche curiosity but a global force. Leading the charge are fiat-backed giants USDT and USDC, which together command a staggering 92% of the market. Yet, as competition intensifies and regulators tighten their grip, the stablecoin landscape is entering turbulent waters. At the heart of this storm stands Tether, the issuer of USDT, facing mounting challenges that could reshape its dominance.
Tether’s towering rise meets new rivals
Tether’s ascent has been nothing short of remarkable. Boasting a market capitalisation exceeding $140 billion, USDT supports over 400 million users, many of whom reside in underbanked regions where traditional financial systems fall short. According to a 2024 report by the World Bank, nearly 1.4 billion adults globally lack access to banking services, a gap that stablecoins like USDT have rushed to fill. Tether’s reach and reliability have made it a lifeline for millions, but its throne is under siege. Emerging players and established rivals alike are circling, eager to chip away at its market share, while regulatory headwinds threaten to disrupt its reign.
Adding a fresh twist to the tale, Reeve Collins—Tether’s co-founder—has entered the fray with Pi Protocol, a yield-bearing stablecoin set to launch on the Ethereum and Solana blockchains in 2025. Backed by real-world assets, Pi Protocol promises returns for holders, a feature greenlit by the U.S. Securities and Exchange Commission (SEC) earlier this year. While its compliance with Europe’s strict rules remains uncertain, its innovative structure could appeal to American investors, positioning it as a formidable contender in the race for stablecoin supremacy.
Europe’s regulatory reckoning shakes the market
Across the Atlantic, Tether’s fortunes have taken a hit. The European Union’s Markets in Crypto-Assets (MiCA) framework, fully implemented by December 2024, has redrawn the rules of the game. Requiring stablecoin issuers to secure an electronic money institution (EMI) licence and maintain a 1:1 reserve ratio for fiat-backed tokens, MiCA aims to safeguard consumers and ensure transparency. Tether, however, failed to meet these standards, leading to its delisting from EU exchanges. The European Securities and Markets Authority (ESMA) had issued warnings to trading platforms as early as mid-2024, yet Tether labelled the EU’s enforcement as “hasty” and disruptive—a claim that rings hollow given MiCA’s years-long development.
The fallout has been stark. European users now face limited access to USDT, while ten other stablecoin issuers have secured MiCA approval, stepping into the void. Dr. Anna Müller, a cryptocurrency policy expert at the University of Munich, notes, “Tether’s exclusion from the EU underscores the bloc’s commitment to regulation over market dominance. It’s a wake-up call for issuers who assumed global reach could sidestep local rules.” For European investors, this shift could signal a pivot towards regulated alternatives, potentially fragmenting the stablecoin ecosystem.
The U.S. joins the regulatory fray
Tether’s woes aren’t confined to Europe. In the United States, the Senate Banking Committee recently advanced the GENIUS Act, a bill targeting payment-focused stablecoins with market caps above $10 billion. Aimed at bolstering oversight, the legislation demands rigorous reserve standards, liquidity buffers, and anti-money laundering measures—requirements that hit foreign issuers like Tether harder than their domestic counterparts. Circle, the U.S.-based issuer of USDC, has signalled its readiness to comply, leveraging its local footing. Tether, headquartered in El Salvador with no formal U.S. presence, may find the path to compliance steeper.
Only two players—Tether and Circle—currently meet the bill’s market cap threshold, thrusting them into the regulatory spotlight. Should the GENIUS Act pass the full Senate, Tether’s operations could face heightened scrutiny, raising questions about its adaptability. “The U.S. is sending a clear message: stablecoins are welcome, but only under our terms,” says James Carter, a financial regulation analyst at the Peterson Institute for International Economics. For Tether, navigating this transatlantic regulatory squeeze will be no small feat.
A stablecoin showdown looms
Despite these hurdles, Tether retains an iron grip on the market, leading in both capitalisation and 24-hour trading volume. Its CEO, Paolo Ardoino, remains defiant, asserting that competitors are out to “kill Tether” rather than innovate. Yet, as global regulators flex their muscles and new entrants like Pi Protocol gain traction, the stablecoin giant must tread carefully. The stakes are high: a misstep could cede ground to rivals or spark a broader divide between regulated and unregulated stablecoins.
