Stablecoin 2025: A breakthrough opportunity or a challenging turning point for Tether?

The year 2025 is being likened by financial experts to the "era of stablecoins" as this type of digital asset witnesses an unprecedented boom globally.

Under the leadership of a cryptocurrency-friendly government in the United States, stablecoins—cryptocurrencies pegged to stable assets like the USD—have evolved from a niche phenomenon to a key financial force. The two biggest names today, USDT and USDC, hold up to 92% of the market share, affirming the dominant position of fiat-backed stablecoins. However, in an increasingly fierce competitive landscape and tightening regulatory environment, the stablecoin market is entering a turbulent phase. At the center is Tether—the issuer of USDT—facing a series of challenges that could shake the throne they once held.

Tether soars but competitive pressure increases

Tether has had a spectacular growth journey. With a market capitalization exceeding $140 billion and more than 400 million users—most of them from regions lacking access to traditional banking—USDT has become an essential financial solution for millions of people worldwide. According to the World Bank's 2024 Report, nearly 1.4 billion adults are unbanked, creating a huge void that stablecoins like USDT are quickly filling. Tether's reliability and popularity make it a financial lifeline in many emerging economies.

However, that aura is being challenged. New competitors are continuously emerging, while long-established names are also expanding their influence, gradually encroaching on Tether's market share. Accompanying this is a wave of tightening oversight from global authorities—an element that could slow down the company's growth.

Adding to the drama, Reeve Collins—co-founder of Tether—has just announced her return to the market with Pi Protocol, a lucrative stablecoin that is expected to launch on Ethereum and Solana platforms in 2025. Backed by real assets, Pi Protocol promises returns to holders, a feature approved by the U.S. Securities and Exchange Commission (SEC). While it's unclear whether the project will meet stringent European standards, in the U.S., Pi Protocol's innovative structure could make it a formidable competitor in the race for the top of the stablecoin market.

Europe strikes hard, market fluctuates

In Europe, Tether is under intense pressure from the MiCA regulatory framework (Thị the European Union's tử) Crypto Asset market, which officially takes effect from December 2024. The new regulation requires stablecoin issuers to own a (EMI) cryptocurrency institution license and maintain a 1:1 reserve ratio with collateral. MiCA's goal is to improve transparency and protect consumers.

However, Tether did not meet these conditions and has been removed from exchanges in the EU region. Although the European Securities and Markets Authority (ESMA) warned in advance since mid-2024, Tether has criticized the EU's enforcement move as "hasty" and "obstructive," a claim that is seen as unconvincing in the context of MiCA being prepared for many years.

As a result, users in Europe are currently limited in their access to USDT, while at least 10 other issuers have been approved under MiCA, ready to fill the gap. According to Dr. Anna Müller, a cryptocurrency policy expert at the University of Munich: "Tether's exclusion from the EU market clearly demonstrates Europe's commitment to prioritizing legal compliance over market power. This is a wake-up call for issuers who still believe that global scale can outweigh local regulations."

The US enters the game, the rules are tightened further

The situation for Tether is getting more difficult as the United States is also intensifying its oversight of stablecoins. The U.S. Senate Banking Committee has just passed the GENIUS Act, targeting stablecoins with a market capitalization above $10 billion. The bill requires stringent reserve standards, safe liquidity ratios, and anti-money laundering measures—particularly disadvantaging foreign issuers like Tether, while being more suitable for domestic companies like Circle, the issuer of USDC.

Currently, only Tether and Circle are eligible to be impacted by GENIUS, putting these two giants in the "crosshairs" of U.S. regulators. If the bill is passed by the Senate, Tether's operations may face even tighter scrutiny. "The U.S. is sending a clear message: stablecoins are welcome, but they must comply with our rules," said James Carter, an expert at the Peterson Institute for International Economics. With its headquarters in El Salvador and no official legal presence in the U.S., Tether will face more challenges than Circle in complying with the new laws.

The Great Stablecoin War is Coming

Despite facing regulatory waves and stiff competition, Tether still holds a unique position in terms of capitalization and daily trading volume. CEO Paolo Ardoino asserted that the rival "just wants to take down Tether" instead of actually innovating. However, as global regulators get tighter, and new names like Pi Protocol start gaining traction, Tether will be forced to tread more cautiously than ever. A strategic mistake could cause them to lose market share or even contribute to diverging the stablecoin market into two segments: regulated and decentralized.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making any decisions. We are not responsible for your investment decisions.

• U.S. SEC: Some stablecoins are not securities
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Mr. Teacher

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