{"id":1919,"date":"2025-07-31T10:06:07","date_gmt":"2025-07-31T10:06:07","guid":{"rendered":"https:\/\/eandelmagazine.com\/eandelmagazine\/?p=1919"},"modified":"2025-07-31T10:06:07","modified_gmt":"2025-07-31T10:06:07","slug":"tether-usdt-and-usdc-dominate-the-stablecoin-market-but-is-this-concentration-a-risk-for-investors","status":"publish","type":"post","link":"https:\/\/eandelmagazine.com\/eandelmagazine\/tether-usdt-and-usdc-dominate-the-stablecoin-market-but-is-this-concentration-a-risk-for-investors\/","title":{"rendered":"Tether (USDT) and USDC Dominate the Stablecoin Market, but Is This Concentration a Risk for Investors?"},"content":{"rendered":"<header class=\"hideOnPrint yf-1stjmrn\">\n<div class=\"ybar-sticky\">\n<div id=\"ybar\" class=\"ybar-ytheme-crunch  ybar-property-finance  ybar-variant-none _yb_kkul5x _yb_na1vgi _yb_79nkit  _yb_1447uxu        ybar-track-link-views non-generic-property _yb_lyi21q      \" role=\"banner\" data-spaceid=\"980770557\" data-testid=\"ramp_ii_stock_picks_card_treatment,Email_Birth_Year_on_Checkout_for_SO,addensitylevers-test\" data-version=\"3.10.78\" data-issinglerowheader=\"true\" data-issinglerowsearchbox=\"true\">\n<div id=\"ybar-inner-wrap\" class=\"_yb_1meo0jp \">\n<div class=\"_yb_1hpv8qw\">\n<div class=\"_yb_123jq1u _yb_1dx2ti5 \">\n<div class=\"_yb_yqa3u4\"><a id=\"ybar-logo\" class=\"_yb_8v20ad      _yb_2qluh3\" href=\"https:\/\/finance.yahoo.com\/\" target=\"_self\" data-ylk=\"slk:finance;elm:logo;sec:ybar;subsec:logo;itc:0;\" data-rapid_p=\"480\" data-v9y=\"1\"><\/a><img fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-1920\" src=\"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-content\/uploads\/2025\/07\/dff94ccde94c54129fb828c3078dd937.webp.jpg\" alt=\"\" width=\"640\" height=\"427\" srcset=\"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-content\/uploads\/2025\/07\/dff94ccde94c54129fb828c3078dd937.webp.jpg 640w, https:\/\/eandelmagazine.com\/eandelmagazine\/wp-content\/uploads\/2025\/07\/dff94ccde94c54129fb828c3078dd937.webp-300x200.jpg 300w\" sizes=\"(max-width: 640px) 100vw, 640px\" \/><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/header>\n<p><main id=\"nimbus-app\" class=\"layoutContainer yf-w6ui20\" tabindex=\"-1\"><\/p>\n<section class=\"mainContainer yf-w6ui20\">\n<section class=\"mainContent yf-w6ui20\">\n<section class=\"main yf-w6ui20\">\n<section id=\"main-content-wrapper\" class=\"gridLayout yf-w6ui20\">\n<div class=\"article yf-l7apfj\">\n<article class=\"article-wrap no-bb\" data-testid=\"article-content-wrapper\">\n<div class=\"cover-wrap yf-1rjrr1\">\n<div class=\"cover-headline yf-1rjrr1\"><\/div>\n<\/div>\n<div class=\"byline yf-1k5w6kz\">\n<div class=\"byline-attr yf-1k5w6kz\">\n<div>\n<div class=\"byline-attr-author yf-1k5w6kz\"><a class=\"primary-link fin-size-large noUnderline yf-u4gyzs\" href=\"https:\/\/finance.yahoo.com\/author\/\" target=\"_self\" data-ylk=\"elm:author;elmt:link;itc:0;slk:Dominic%20Basulto%2C%20The%20Motley%20Fool;sec:content-canvas\" data-rapid_p=\"2\" data-v9y=\"1\">Dominic Basulto, The Motley Fool<\/a><\/div>\n<div class=\"byline-attr-time-style\"><time class=\"byline-attr-meta-time\" datetime=\"2025-07-31T09:00:00.000Z\" data-timestamp=\"2025-07-31T09:00:00.000Z\">Thu, July 31, 2025 at 10:00 AM GMT+1<\/time>\u00a0<span class=\"byline-attr-mins-read yf-37lelh\">6 min read<\/span><\/div>\n<\/div>\n<\/div>\n<div class=\"byline-share yf-1k5w6kz\">\n<div>\n<div class=\"icon fin-icon inherit-icn sz-large yf-i21ao6\" aria-hidden=\"true\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"body-wrap yf-1sauy26\">\n<h2 class=\"type-section-sm-bold yf-gjjls9\">In This Article:<\/h2>\n<div class=\"ticker-list yf-pqeumq\">\n<div>\n<div>\n<div class=\"scroll-carousel yf-r5lvmz\" data-testid=\"carousel-container\">\n<div class=\"carousel-top yf-pqeumq\">\n<div>\n<div class=\"name yf-90gdtp\"><span class=\"symbol yf-90gdtp\">USDC-USD<\/span><\/div>\n<p><span class=\"ticker-wrapper yf-90gdtp has-follow\"><a class=\"ticker medium hover2 border has-follow streaming extraPadding yf-90gdtp\" title=\"USDC-USD\" href=\"https:\/\/finance.yahoo.com\/quote\/USDC-USD\/\" data-testid=\"ticker-container\" aria-label=\"USDC-USD\" data-ylk=\"elm:qte;elmt:link;itc:0;sec:ticker-tag-module;slk:USDC-USD\" data-rapid_p=\"5\" data-v9y=\"1\"><span class=\"d60f3b00 d5882186 fc6ee16d\">-0.02%<\/span><\/a><\/span><\/p>\n<div class=\"follow yf-90gdtp extraPadding\">\n<div class=\"menuContainer follow-btn yf-1l5q6k1\">\n<div class=\"icon fin-icon secondary-icn sz-medium yf-i21ao6\" aria-hidden=\"true\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<div>\n<div class=\"name yf-90gdtp\"><span class=\"symbol yf-90gdtp\">USDT-USD<\/span><\/div>\n<p><span class=\"ticker-wrapper yf-90gdtp has-follow\"><a class=\"ticker medium hover2 border has-follow streaming extraPadding yf-90gdtp\" title=\"USDT-USD\" href=\"https:\/\/finance.yahoo.com\/quote\/USDT-USD\/\" data-testid=\"ticker-container\" aria-label=\"USDT-USD\" data-ylk=\"elm:qte;elmt:link;itc:0;sec:ticker-tag-module;slk:USDT-USD\" data-rapid_p=\"7\" data-v9y=\"1\"><span class=\"d60f3b00 d5882186 c956d6fc\">-0.01%<\/span><\/a><\/span><\/p>\n<div class=\"follow yf-90gdtp extraPadding\">\n<div class=\"menuContainer follow-btn yf-1l5q6k1\">\n<div class=\"icon fin-icon secondary-icn sz-medium yf-i21ao6\" aria-hidden=\"true\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"body yf-1ir6o1g\">\n<div class=\"atoms-wrapper\">\n<h2 class=\"header-scroll yf-gn6wdt\">Key Points<\/h2>\n<ul class=\"yf-1woyvo2\">\n<li class=\"yf-1woyvo2\">\n<p class=\"yf-1090901\">Just two stablecoins (Tether and USDC) account for 90% of the market value of the stablecoin industry.<\/p>\n<\/li>\n<li class=\"yf-1woyvo2\">\n<p class=\"yf-1090901\">Now that stablecoins are being integrated into the traditional financial system, investors need to be aware of the risks.<\/p>\n<\/li>\n<li class=\"yf-1woyvo2\">\n<p class=\"yf-1090901\">New stablecoin legislation could fix any potential problems of concentration by encouraging many more issuers to emerge.<\/p>\n<\/li>\n<li class=\"yf-1woyvo2\">\n<p class=\"yf-1090901\"><a class=\"link \" href=\"https:\/\/api.fool.com\/infotron\/infotrack\/click?apikey=35527423-a535-4519-a07f-20014582e03e&amp;impression=e7997aa7-a80c-4e96-bb93-8e1a92a6e69d&amp;url=https%3A%2F%2Fwww.fool.com%2Fmms%2Fmark%2Fe-sa-nonbbn-kp%3Faid%3D8867%26source%3Disaedikp0000053%26ftm_cam%3Dsa-bbn-evergreen%26ftm_veh%3Dkeypoints_pitch_feed_yahoo%26ftm_pit%3D17670\" target=\"_blank\" rel=\"nofollow noopener\" data-ylk=\"slk:10 stocks we like better than USDC \u203a;elm:context_link;itc:0;sec:content-canvas\" data-rapid_p=\"9\" data-v9y=\"1\">10 stocks we like better than USDC \u203a<\/a><\/p>\n<\/li>\n<\/ul>\n<div class=\"wrapper yf-eondll\" data-testid=\"inarticle-ad\"><\/div>\n<p class=\"yf-1090901\">According to the latest\u00a0<a class=\"link \" href=\"https:\/\/www.fool.com\/research\/largest-stablecoins\/?utm_source=yahoo-host-full&amp;utm_medium=feed&amp;utm_campaign=article&amp;referring_guid=39d3be84-5107-4118-918c-f2aeacf5e4db\" target=\"_blank\" rel=\"nofollow noopener\" data-ylk=\"slk:stablecoin research from The Motley Fool;elm:context_link;itc:0;sec:content-canvas\" data-rapid_p=\"10\" data-v9y=\"1\">stablecoin research from The Motley Fool<\/a>, just two stablecoins &#8212;\u00a0<strong>Tether<\/strong>\u00a0<span class=\"ticker\">(CRYPTO: USDT)<\/span>\u00a0and\u00a0<strong>USDC<\/strong>\u00a0<span class=\"ticker\">(CRYPTO: USDC)<\/span>\u00a0&#8212; account for a whopping 90% of the $250 billion stablecoin market. In terms of market cap, nobody else even comes close.<\/p>\n<p class=\"yf-1090901\">That might not have mattered as much just 12 months ago, before\u00a0<a class=\"link \" href=\"https:\/\/www.fool.com\/terms\/s\/stablecoins\/?utm_source=yahoo-host-full&amp;utm_medium=feed&amp;utm_campaign=article&amp;referring_guid=39d3be84-5107-4118-918c-f2aeacf5e4db\" target=\"_blank\" rel=\"nofollow noopener\" data-ylk=\"slk:stablecoins;elm:context_link;itc:0;sec:content-canvas\" data-rapid_p=\"11\" data-v9y=\"1\">stablecoins<\/a>\u00a0started to go mainstream. But stablecoins are steadily being integrated into the traditional financial system, so any concentration in the stablecoin industry now has potential implications for investors everywhere. Let&#8217;s take a closer look.<\/p>\n<h2 class=\"header-scroll yf-gn6wdt\">What&#8217;s so bad about concentration?<\/h2>\n<p class=\"yf-1090901\">Within the crypto industry, one of the rallying cries has always been &#8220;decentralization.&#8221; The only way to eliminate risk, according to the original crypto purists, was to decentralize everything as much as possible. For example, when\u00a0<strong>Bitcoin<\/strong>\u00a0launched back in 2009, ownership was supposed to be as decentralized as possible, to eliminate the risk of any individual, corporation, or government controlling it.<\/p>\n<div class=\"wrapper yf-eondll\" data-testid=\"inarticle-ad\">\n<div id=\"sda-INARTICLE-16e96813-aeb7-39b6-9843-2b55618c0ec6-2\" class=\"sdaContainer dv-all sda-INARTICLE-16e96813-aeb7-39b6-9843-2b55618c0ec6-2 yf-1m4k8v7 overflow margin visible placeholder\" data-testid=\"ad-container\" data-ad-unit=\"\/22888152279\/us\/yfin\/ros\/mw\/us_yfin_ros_mw_mid_center\" data-ad-size=\"300x250,320x50\" data-ad-region=\"main-dynamic\" data-ad-loc=\"mid_center_2\" data-google-query-id=\"CPrF0qfr5o4DFYIZigMdTYku4A\">\n<div id=\"google_ads_iframe_\/22888152279\/us\/yfin\/ros\/mw\/us_yfin_ros_mw_mid_center_2__container__\"><iframe id=\"google_ads_iframe_\/22888152279\/us\/yfin\/ros\/mw\/us_yfin_ros_mw_mid_center_2\" tabindex=\"0\" title=\"3rd party ad content\" src=\"https:\/\/aff6f837535cefe0d13ee9970d207280.safeframe.googlesyndication.com\/safeframe\/1-0-45\/html\/container.html\" name=\"\" width=\"1\" height=\"1\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\" sandbox=\"allow-forms allow-popups allow-popups-to-escape-sandbox allow-same-origin allow-scripts allow-top-navigation-by-user-activation\" data-is-safeframe=\"true\" aria-label=\"Advertisement\" data-google-container-id=\"7\" data-load-complete=\"true\" data-mce-fragment=\"1\"><\/iframe><\/div>\n<\/div>\n<\/div>\n<p class=\"yf-1090901\">In fact, the ultimate goal was to create a &#8220;trustless&#8221; system, in which you did not have to trust any single market participant for the crypto system to work. That&#8217;s what made Bitcoin (and every other cryptocurrency) special. In comparison, the traditional financial system is all about counterparty risk. It is a system based on trust. In other words, you have to be very careful about who you do business with.<\/p>\n<p class=\"yf-1090901\">So that&#8217;s why concentration of any kind tends to raise warning flags within the crypto industry. Look at what&#8217;s happening now with the ownership of Bitcoin &#8212; instead of being completely dispersed, Bitcoin is now falling into the hands of a few big players, such as Bitcoin treasury companies and the investment firms that run the spot Bitcoin exchange-traded<\/p>\n<p class=\"yf-1090901\">And, of course, concentration now exists within the stablecoin industry. Tether has a staggering $164 billion market cap, while USDC has a market cap of $64 billion. The next closest competitor is\u00a0<strong>Dai<\/strong>\u00a0<span class=\"ticker\">(CRYPTO: DAI)<\/span>, with a tiny market cap of just $5.4 billion. If you were an economist, you&#8217;d probably call this a duopoly. And, as you learned in your Economics 101 class, there&#8217;s only one thing worse than a duopoly: a monopoly.<\/p>\n<\/div>\n<div class=\"read-more-wrapper\" data-testid=\"read-more\">\n<h2 class=\"header-scroll yf-gn6wdt\">A worst-case scenario for stablecoins<\/h2>\n<p class=\"yf-1090901\">It&#8217;s easy to ignore the potential risk that stablecoins might pose to the financial system. After all, the word &#8220;stable&#8221; is hard-coded right into their name. A stablecoin always trades for $1, right? So what could possibly be risky about stablecoins?<\/p>\n<p class=\"yf-1090901\">As it turns out, a lot. Stablecoins must maintain their 1-to-1 peg to the dollar at all costs. In theory, at any time, an investor can exchange one stablecoin for $1, no questions asked. To do that, issuers back their stablecoins with cash and cash equivalents.<\/p>\n<p class=\"yf-1090901\">But here&#8217;s the thing: There have been several cases in the past few years when stablecoins dramatically lost their peg. For example, amid the regional banking crisis of 2023, USDC briefly depegged. As it turns out, $3.3 billion of the cash that was supposed to back the stablecoin was in the bank vault of Silicon Valley Bank, and that caused a brief panic in the market. Tether, too, has had multiple instances when it lost its peg.<\/p>\n<p class=\"yf-1090901\">One of the most catastrophic depeggings of all time took place in 2022, when TerraUSD (UST) lost its peg to the dollar, wiping out $45 billion in value and bringing down the entire crypto market. It turns out that TerraUSD was an algorithmic stablecoin that relied on algorithms, not cash, for backing. Needless to say, what once seemed like a stroke of financial genius now seems like an act of financial insanity.<\/p>\n<p class=\"yf-1090901\">Even before TerraUSD lost its peg, finance professors at Yale warned of the potential risks of stablecoins. As they saw it, stablecoins could unleash financial chaos that could take down the entire financial system.<\/p>\n<p class=\"yf-1090901\">Think of a classic bank run, and apply this analogy to stablecoins. Holders of stablecoins panic, rush to redeem them for $1 in cash each, only to find out that there is not enough cash to go around for everyone. If someone doesn&#8217;t step in immediately to provide a liquidity backstop, bad things happen.<\/p>\n<h2 class=\"header-scroll yf-gn6wdt\">Washington to the rescue?<\/h2>\n<p class=\"yf-1090901\">That&#8217;s why the new stablecoin legislation, known as the Genius Act, is so important. It is supposed to remove all the obvious weak links in the system. For example, it specifically says that all stablecoins must be backed 1-for-1 with cash or cash equivalents. No funny business with algorithms or anything else. And it mandates monthly audit reports on those reserves, just to make sure that all the cash that&#8217;s supposed to be in the bank vault is actually in the bank vault.<\/p>\n<p class=\"yf-1090901\">The Genius Act also opens the door for many more participants to issue their own stablecoins. Already, a mix of retailers, fintech giants, and Silicon Valley companies have hinted that they might launch stablecoins of their own. The introduction of so many stablecoins at one time might be a bit confusing for investors, but they might end up saving the modern financial system because this diversification will spread risk rather than concentrate it.<\/p>\n<h2 class=\"header-scroll yf-gn6wdt\">Should you invest $1,000 in USDC right now?<\/h2>\n<p class=\"yf-1090901\">Before you buy stock in USDC, consider this:<\/p>\n<p class=\"yf-1090901\">The\u00a0<em>Motley Fool Stock Advisor<\/em>\u00a0analyst team just identified what they believe are the\u00a0<strong><a class=\"link \" href=\"https:\/\/api.fool.com\/infotron\/infotrack\/click?apikey=35527423-a535-4519-a07f-20014582e03e&amp;impression=1d42c597-37aa-4367-a84e-bcd354968563&amp;url=https%3A%2F%2Fwww.fool.com%2Fmms%2Fmark%2Fe-sa-bbn-bn%3Faid%3D8867%26source%3Disaeditxt0001088%26ftm_cam%3Dsa-bbn-evergreen%26ftm_veh%3Darticle_pitch_feed_yahoo%26ftm_pit%3D17500&amp;utm_source=yahoo-host-full&amp;utm_medium=feed&amp;utm_campaign=article&amp;referring_guid=39d3be84-5107-4118-918c-f2aeacf5e4db\" target=\"_blank\" rel=\"nofollow noopener\" data-ylk=\"slk:10 best stocks;elm:context_link;itc:0;sec:content-canvas\" data-rapid_p=\"13\" data-v9y=\"1\">10 best stocks<\/a><\/strong>\u00a0for investors to buy now\u2026 and USDC wasn\u2019t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n<\/section>\n<\/section>\n<\/section>\n<\/section>\n<p><\/main><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Dominic Basulto, The Motley Fool Thu, July 31, 2025 at 10:00 AM GMT+1\u00a06 min read&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-1919","post","type-post","status-publish","format-standard","hentry","category-business"],"featured_image_urls":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","wpucv-grid-three":"","wpucv-grid-two":"","wpucv-grid-one":"","wpucv-classic":"","wpucv-classic-small":"","wpucv-galary":"","covernews-slider-full":"","covernews-slider-center":"","covernews-featured":"","covernews-medium":"","covernews-medium-square":""},"author_info":{"info":["vicrollion"]},"category_info":"<a href=\"https:\/\/eandelmagazine.com\/eandelmagazine\/category\/business\/\" rel=\"category tag\">Business<\/a>","tag_info":"Business","comment_count":"0","_links":{"self":[{"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/posts\/1919","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/comments?post=1919"}],"version-history":[{"count":1,"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/posts\/1919\/revisions"}],"predecessor-version":[{"id":1921,"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/posts\/1919\/revisions\/1921"}],"wp:attachment":[{"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/media?parent=1919"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/categories?post=1919"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/eandelmagazine.com\/eandelmagazine\/wp-json\/wp\/v2\/tags?post=1919"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}