A look at challenges facing Tether and Circle's stablecoin duopoly, such as intermediaries like exchanges and DeFi protocols exploring their own stablecoins
Amazing work Nic Carter … Thomas Messina : Excellent article from Nic Carter on the future of stablecoins — “Based on the declining fixed costs of issuing a stable …
Context & Ripple Effects
Tether and Circle’s rivalry has already been shaped by episodes of stress and shifting demand, including the period when redemptions from Tether coincided with USDC growth.
The competitive backdrop also includes Circle’s push to frame Tether as a policy concern and earlier calls to regulate stablecoin issuers more like banks. Platform-led issuance would test whether distribution can outweigh the incumbents’ established scale.
First-order effects
- Exchanges and DeFi protocols evaluating their own stablecoins become potential new issuers rather than merely distribution channels for Tether and Circle.
- Tether and Circle face greater pressure to retain integrations, liquidity and user preference across the platforms that route stablecoin activity.
Second-order effects
- More platform-issued coins could fragment liquidity and make interoperability, redemption access and trading-pair support more important competitive levers.
- A platform that adopts its own coin may reduce its reliance on the two incumbents, forcing Tether and Circle to compete more directly for placement and institutional trust.
Third-order effects
- If this pattern broadens, stablecoin issuance could shift from a two-issuer market toward a platform-controlled model, with exchanges and protocols owning more of the payment layer.
- That shift would sharpen the relevance of the earlier policy push to regulate stablecoin issuers like banks, because a wider set of platforms could take on issuer-like roles.
The trend: Stablecoins are moving from a concentrated issuer market toward competition over who controls distribution, integration and the user relationship.