Tether (USDT) Market Share Declines as USDC Surges, Awaits Suspension of Redemptions

With increased crypto adoption and widespread use globally, stablecoins have emerged as favorites among investors and as a store of value for many crypto users.

As cryptocurrency use rises and spreads globally, stablecoins have become popular investments and a way for many crypto users to store value.

In recent years, Tether has been the leading cryptocurrency in the highly concentrated stablecoin market. But as market sentiment changes, Tether's dominance is slowly fading.

At the time of writing, Tether's USDT trading volume has dropped by 8.8% over 24 hours to $38.65 billion.

Tether USDT market share declining

Kaiko's report shows that Tether's market share is steadily declining. It was also revealed that USDT's market share on centralized exchanges fell from 82% to 74% in 2024.

The decline is due to an increased shift in market sentiment and regulation on stablecoins. Over the past year, other stablecoins, such as FDUSD, have captured the market, especially since the partnership with Binance.

These factors have put Tether's market dominance to the test.

Increased competition

As reported by AMBCrypto, USDC trading volume surged to $23 billion in 2024 from a low of $9 billion in 2023. The rise in USDC is due to the increased demand for compliant stablecoins.

Major investors, especially institutional ones, are slowly shifting to legally accepted stablecoins to ensure they comply with operational requirements, especially in the European Union.

Source: Kaiko

According to Kaiko, USDC's market share has increased to 12%, approaching FDUSD at 14%.

With higher trade in major crypto exchange platforms such as OKX, Binance, and Bybit, USDC has become a serious competitor to Tether. Moreover, MICA approval of CIRCLE has significantly boosted USDC's market share and trading volume.

Also, as keyrocktrading shared on X, USDC is outpacing Tether in terms of flexibility and accessibility. He noted that,

“USDC’s supply is more elastic than Tethers’. It offers zero fee minting and is more accessible, as dealing with Tethers involves Long transfer times to smaller banks in the Virgin Islands.”

EU regulation of stablecoins

Interestingly, the European Markets in Crypto Assets Regulation (MICA) is set to challenge the continued dominance of non-compliant stablecoins.

With MICA's requirements coming into effect, exchange platforms such as Kraken may be forced to reconsider their stance on stablecoins like Tether. These regulations have major players worried about their EU operations, even for approved stablecoins.

For example, the Tether CEO argued that these requirements could lead to complications for stablecoin issuers.

Overall, MICA has set a precedent that will change how crypto currently operates in the European Union.

Source: Kaiko

Tether to halt USDT redemptions

According to official reports, Tether is set to suspend USDT redemptions on major blockchains by September 2025.

Source: X

Francesco noted this development on X (formerly Twitter), sharing that,

“Tether has announced that it will stop minting USDT on EOS and Algorand as of today. However, USDT redemptions on these blockchains will continue for the next 12 months.”

This follows the 2023 suspension of Tether USDT on other blockchains, including Bitcoin, Kusama, and Bitcoin Cash. For the next 12 months, Tether will be suspending operations on multiple بلاك تشين, aiming to utilize efficient networks for better user experience and overall stability for the stablecoin.

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