The powerhouse stablecoin, Tether’s USDT, has experienced a shift in market share.
From commanding 70% of the stablecoin market in November 2024, it slid to 59.9% by October 2025. This marks the second time within a year that USDT’s dominance has dipped below 60%.
Meanwhile, Circle’s USDC has seen considerable growth, rising from 20.5% to 25.3% during the same period.
This transition occurs alongside the implementation of Europe’s Markets in Crypto-Assets (MiCA) regulation.
However, the dynamics at play suggest a more nuanced situation than simply a regulatory displacement.
The European Union’s MiCA framework was introduced in two stages.
The initial, stablecoin-focused rules went into effect on June 30, 2024.
A broader set of requirements for crypto-asset service providers commenced on December 30, 2024.
Regulatory bodies instructed platforms to immediately discontinue offering stablecoins that didn’t comply with the new rules.
However, the European Securities and Markets Authority (ESMA) granted a “sell-only” grace period through the first quarter of the following year to minimize disruption for users.
In response to the approaching April deadline, major European exchanges began either delisting or restricting USDT trading pairs.
Tether acknowledged these regulatory challenges by investing in StablR, an electronic money institution licensed in Malta, on December 17, 2024.
This action mirrored a previous investment in Quantoz, another MiCA-compliant issuer supported by Tether’s Hadron platform.
Rather than directly altering USDT, Tether chose to support entities already operating under European regulatory frameworks.
The Denominator Effect
Filippo Armani, a data researcher at Dune Analytics, suggests that the decline in USDT’s market share is primarily a result of mathematical factors, not necessarily a fundamental issue.
In a statement shared with CryptoSlate, he explained:
“The overall market expanded more rapidly due to USDC and USDe growth, even though USDT still experienced strong absolute growth. Tether’s supply increased significantly, from $89.1 billion in November 2023 to $133.9 billion by November 2024, and further to $180.9 billion by October 2025.”
Armani also noted that USDC jumped from $24.3 billion to $76.3 billion over the same timeframe, while Ethena’s USDe emerged from practically nothing to reach $12.2 billion.
He conceded that MiCA’s stablecoin regulations prompted major platforms to limit or remove USDT pairs by April 2025, thereby shifting some market share toward compliant alternatives like USDC.
However, he emphasized that this shift is a regional phenomenon and doesn’t indicate a decrease in global demand for USDT.
The data supports this claim. USDT’s supply grew by almost $50 billion between November 2024 and October 2025, even as its percentage of the overall market decreased.
USDC’s percentage gains reflect faster adoption in jurisdictions that comply with regulations, rather than a large-scale movement away from Tether’s product.
Nikolaos Kostopoulos, a senior blockchain consultant at Netcompany SEE & EUI, also views MiCA’s impact as limited to specific geographic regions.
“While MiCA has definitely limited USDT’s presence in Europe, its overall effect on Tether’s global dominance is still constrained. USDT continues to flourish in offshore and emerging markets outside the EU, where regulatory arbitrage is still possible.”
Strategic Countermoves
Tether’s investments in StablR and Quantoz allow it to maintain access to the European market without modifying its USDT brand or supply.
Both platforms operate under Electronic Money Institution licenses, which meet MiCA’s requirements. This allows European platforms to list their tokens without facing regulatory consequences.
Armani believes that this strategy will increase “Tether-ecosystem share in the EU, but not necessarily USDT’s own dominance,” since separate tickers make it difficult to directly attribute the tokens to Tether’s primary product.
The company has also signaled wider ambitions with USAT, a proposed US-regulated stablecoin designed to comply with the GENIUS Act.
Armani sees the US launch as a way to “reclaim market share domestically once live,” especially among institutional buyers who prioritize regulatory clarity.
Meanwhile, Tether Gold (XAUT) has reached a market capitalization of $1.6 billion. The company’s Plasma Layer-1 integration enables zero-fee USDT transfers and yields exceeding 10% through partner neobanks.
Kostopoulos believes that Tether’s EU-focused subsidiaries are unlikely to reverse the decline in dominance.
He added that exchanges and institutional players in the eurozone are already focusing on a new, fully regulated stablecoin based on the euro, driven by nine European banks.
Nevertheless, Kostopoulos stated:
“The more fundamental drivers ahead lie not within MiCA itself, but in new entrants such as World Liberty Financial’s stablecoin and the broader political and commercial interests shaping the next generation of stablecoins.”
The competitive landscape extends beyond simply complying with regulations.
Traditional financial institutions are preparing to launch stablecoins with established banking relationships and existing institutional trust.
Stripe has revealed a platform designed to accelerate the creation of stablecoins, Visa plans to assist banks in issuing their own tokenized fiat currencies, and many other companies are joining the movement.
Tether’s USDT growth, doubling in supply over two years, demonstrates robust demand outside regulated markets.
This shows that regional dynamics alone aren’t enough to halt USDT’s growth.
The question now is whether Tether’s investments in compliant subsidiaries and US-focused products can successfully compete for institutional investments against entities that were built from the ground up to meet regulatory requirements.