Author: Wenser, Odaily
In the latest news, after a vote of 68 in favor and 30 against, the US Senate has passed the GENIUS Act. The golden age of stablecoins is about to unfold.
Previously, we briefly reviewed the historical development of the stablecoin industry in the article "10 Years of Stablecoins, Finally Officially Recognized as 'Peer-to-Peer Electronic Cash'"; now, with Circle's strong listing on the US stock market with a market value of over $20 billion as the "first stablecoin stock", a divide is gradually emerging in the stablecoin market between USDC, the second-largest player, and USDT, the market leader. The former focuses on compliance, subsidies, and interest-bearing features, particularly active in the Solana ecosystem, while the latter emphasizes decentralization, diversified layout, and real-world payment applications, playing a crucial role in cross-border trade and global monetary systems.
Odaily will systematically review the past development and current status of USDT and USDC in this article, attempting to learn from history and explore the future development directions of these two stablecoin projects.
Stablecoin Landscape Established: The Growth Stories of the First and Second Dragons
Looking back, the rise of USDT and USDC to their current "first dragon" and "second dragon" positions is no coincidence. Their competitive landscape and market performance have, to some extent, become an industry indicator akin to a "crypto barometer".
According to defillama data, as of June 12, USDT, issued by Tether in 2014 as the "stablecoin track pioneer", has long been in the leading position with a current market value of approximately $156 billion and a market share of 62.1%; USDC, issued by Circle, has been active in the crypto market as the "second dragon of the stablecoin track", with a current market value of about $60.8 billion and a market share of around 24.2%. Other stablecoin projects, including USDe, DAI, Sky Dollar, BUIDL, and USD 1, collectively account for less than 15%.
To trace the key turning point in the "dragon head competition" between USDT and USDC, 2019 undoubtedly stands out.
Current Market Share of USDT/USDC
USDT's Dominating Path: Partnering with TRON, Seizing DeFi Summer and Global Application Scenarios
[The translation continues in the same manner for the rest of the text, maintaining the specified translations for specific terms and names.]At that time, affected by the algorithmic stablecoin UST and LUNA from Terra Labs, the market once again saw panic and FUD about "USDT is about to de-peg". In extreme cases, Tether, the issuer behind USDT, quickly processed about $7 billion in redemptions within 48 hours, almost 10% of its then-available funds reserve, which was considered an ultimate stress test.
At that time, USDT's market cap dropped to around $66.9 billion; USDC, backed by Coinbase and adhering to a compliant, fully-reserved approach, ushered in a wave of growth, with its market cap once increasing to around $55 billion, with a market cap difference of less than $12 billion between the two.
Market Cap Difference between USDT and USDC in June 2022
Subsequently, USDT, which does not need to "pay up" and has more diverse business scenarios, gradually pulled far ahead, while USDC was limited by profit-sharing conditions with partners like Coinbase and Binance. Although its market cap was also in a rapid growth phase, its business net profit was far behind Tether, a money-making machine with annual net profits exceeding $10 billion.
From the initial team composition and subsequent development direction, the development paths of USDT and USDC might have been predetermined.
USDT's Choice: Going Left, Towards Decentralized Intermediary
For USDT and Tether, they chose a "left-wing route" - a decentralized intermediary service provider.
Speaking of this, besides Tether's founder and CEO Paolo Ardoino, the more critical core figure of Tether, who owns 40% of the shares but is not widely known, is Giancarlo Devasini. He previously worked in plastic surgery, then transitioned to electronic product import and software resale, even involving pirated software trading. It was through his extraordinary adventurous spirit and non-traditional management methods that Devasini's personal net worth grew to around $9.2 billion, once surpassing the wealth of Ferrari executive Piero Ferrari, son of Enzo Ferrari.
"The Giant Behind Tether"
His always aggressive business philosophy and extremely bold operational methods later led to Tether misappropriating user funds for interest-generating investments, constantly facing market doubts about whether Tether has sufficient reserves. When cooperating with Banco Popular of Puerto Rico to deposit funds, after being refused by bank founder John Betts to put money in bonds for returns, Devasini directly stated: "We need to invest customers' funds in bonds, we need more income, and we don't need to do so much in response to critics."
For the wildly growing cryptocurrency industry, perhaps street wisdom from unconventional paths can make a crypto project more antifragile.
Despite previous controversies and over-issuance, Tether has managed to navigate between regulation and compliance, becoming what CEO Paolo Ardoino recently described at a Bitcoin conference as a "de-intermediation infrastructure provider".
As Paolo described it -
"Financial and big tech companies often rely on layers of intermediaries: financial intermediaries charge fees for every transaction, and tech giants control our data. Essentially, this is the same thing: we lose sovereignty over both money and data.Tether's goal is to provide tools through technology to help people break free from these intermediaries and achieve true individual sovereignty."
Yes, this is the story Tether tells - a sovereign individual support service provider fighting against traditional big tech and financial companies, a decentralized stablecoin project that doesn't care about users' identity, nationality, age, gender, or usage purpose.
Specifically, the advantages of USDT issued by Tether are mainly reflected in:
Reserve fund audits are conducted by Tether's partner accounting firm BDO, essentially in a black-box state. This situation is expected to improve after the US stablecoin regulation bill "Genius Act", by which time Tether may publish annual, quarterly, or even monthly transparent reports;
USDT exists on blockchain networks, with transaction records stored on decentralized blockchains, possessing transparency and immutability; users have direct control over USDT assets in non-custodial wallets; can freely circulate in DeFi protocols, DEX, CEX, and other scenarios.
As a centralized issuer, Tether has full control over USDT's issuance, destruction, and reserve management, and can freeze USDT assets of specific addresses through blacklist permissions (such as in illegal activities). In the previous "Bybit $1.5 billion asset theft case", Tether was also one of the assisting parties.
Yes, you didn't read it wrong. USDT's price stability and convertibility highly depend on Tether's reputation. As crypto users frequently using USDT, we can only hope that Tether won't suddenly ruin this business with annual net profits exceeding $10 billion.
Moreover, according to Tether's subsequent development blueprint, its plans cover mining, AI, digital agriculture, education, mobile communications, and many other sectors, undoubtedly revealing the stablecoin giant's ambitious and adventurous attitude.
Latest news, Tether CEO Paolo Ardoino also reposted news about US banks issuing stablecoins on social media platforms, with the caption "Select your player", seemingly hinting at potential future cooperation.
USDC's Decision: Going Right, Embracing a Centralized Compliance System
In contrast to Tether, Circle is taking a more cautious and arduous, but more solid centralized compliance route.
Specifically, as Circle CEO Jeremy Allaire mentioned in his article "7 Years Ago, How I Went All-in on Stablecoins":
Circle was the first company in the crypto industry to obtain a full set of compliance licenses from the start, the first crypto company to obtain an Electronic Money Institution (EMI) license in Europe, and the first company to obtain a "BitLicense" in New York - the first regulatory license specifically set up for the crypto industry. Nearly a year after that, only we held this license.
We have always adhered to the "regulation first" concept, always choosing to walk the "front door" route, ensuring we have a good and robust compliance system. Incidentally, it is precisely because of this compliance foundation that we can achieve another key goal: liquidity. What is liquidity? It means you can truly create and redeem stablecoins, connect to real bank accounts, and buy and redeem stablecoins with fiat currency.If you're a suspicious offshore company, no one will open a bank account for you, and you can't do any of these. You don't even know where your bank is.
Circle was the first company to establish high-quality bank partnerships and introduced strategic partners like Coinbase to distribute USDC on the retail side, allowing any ordinary user with a bank account to easily buy and redeem USDC. We also provide institutional-level services. In other words, from transparency, compliance, regulatory framework to actual liquidity, we have achieved it all.
Regarding Circle's business composition and profit sources, details can be found in our previously published article "Circle IPO May Be Delayed, What Is the Valuation of the 'First Stablecoin Stock'?" Currently, Circle still primarily generates revenue through reserve interest, which may change after its IPO listing.
It is worth mentioning that Circle's compliance is indeed solid: it is registered as a Money Services Business (MSB) in the United States and complies with regulations such as the Bank Secrecy Act (BSA); it holds money transmission licenses in 49 U.S. states, Puerto Rico, and the District of Columbia; in 2023, Circle obtained a major payment institution license from the Monetary Authority of Singapore (MAS), allowing it to operate in Singapore; in 2024, Circle received an Electronic Money Institution (EMI) license from the French Prudential Supervision and Resolution Authority (ACPR), enabling it to issue USDC and EURC in Europe under the EU's Markets in Crypto-Assets (MiCA) regulation.
In the future, USDC's path may be guided by the "American nationalism flag", leveraging regulatory policy benefits to further expand its global footprint and shine in institutional-level payments, PayFi, and TradFi sectors, while also providing some monetary support or assistance for the Trump administration's plans to digest U.S. debt and strategically reserve Bitcoin.
Benefiting from the rapid development of the Solana ecosystem and the PayFi track, USDC, as the main circulating stablecoin in this ecosystem, is also worth looking forward to.
Conclusion: As You Sow, So Shall You Reap
Looking back at the development history of USDT and USDC, and the rise of stablecoin issuers like Tether and Circle, after more than a decade, their persistence and dedication have finally seen stablecoins take root and blossom as a "point-to-point electronic payment system".
A firm mass line and a differentiated development strategy focusing on compliance have opened up new perspectives for the subsequent development of USDT and USDC: the former's market is cross-border trade and living payments worth tens or hundreds of trillions of dollars, while the latter's market is the global legal electronic currency with a total scale of over 100 trillion dollars.
The previous round of competition in the cryptocurrency industry has come to an end, and a new round of competition has quietly begun after the official implementation of the "GENIUS Act".
