Recently, the latest data disclosed by Tether shows that its holdings of U.S. Treasury securities have surpassed $120 billion. This figure not only exceeds the holdings of sovereign nations such as the UAE and Germany but also positions a stablecoin issuer as the 18th largest holder of U.S. debt globally.
For those familiar with the crypto market, this figure is astonishing; while in traditional finance, it resembles a structural 'financial tectonic movement.' Some believe that stablecoin issuers like Circle and Tether are absorbing more U.S. Treasuries than most countries, which could reshape the U.S. economy.
In the eyes of supporters, this is a new extension of dollar hegemony: through on-chain liquidity and a global payment network, stablecoins provide an unprecedented tool for solidifying the dollar's dominant position in international trade and digital assets. However, critics warn that even if stablecoins account for only a small portion of the entire market, they could lead to financial instability in the banking sector, as stablecoins may siphon funds from bank deposits, threatening the credit system since deposits are necessary liquidity for loans.
The prosperity of the stablecoin market and the oligopolistic structure
The stablecoin market is currently in a period of liquidity prosperity. According to data from stablecoins.asxn.xyz, the total market capitalization of global stablecoins has soared to $269.73 billion, a historic high. Among them, Tether's USDT leads with a market cap of $164.49 billion, followed closely by Circle's USDC at $64.97 billion, together occupying over 85% of the market share, forming a clear oligopolistic monopoly.
Interestingly, despite the highly concentrated landscape, the market's innovative vitality has not been suppressed. Since 2024, the total number of stablecoins has increased to 282, with various new scenarios continually giving rise to new categories, from on-chain payments to cross-border settlements.
In terms of market cap trends, USDT remains stable and rising, while USDC has experienced a slowdown in growth since May 2025, and decentralized stablecoin USDe recorded a monthly increase of over 75% in July, becoming a 'dark horse' that disrupts the landscape.
USDT and USDC: Two routes, two logics
While USDT and USDC both promise a 1:1 peg to the dollar, they have chosen entirely different paths in terms of development and brand positioning.
Tether (USDT): A controversial pioneer of marketization
USDT is issued by Tether Limited, registered in Hong Kong and headquartered in Switzerland, dominating the stablecoin space through a market-oriented approach. With a wide range of trading pairs and massive circulation, USDT has become the most commonly used stablecoin in the crypto market, even navigating through gray areas with ease. However, it has long been criticized for its reserve transparency issues. In October 2021, Tether was fined $41 million by U.S. regulators for reserve-related issues. Although it regularly publishes reserve reports, insufficient audit frequency and details still leave the market doubtful of its trustworthiness.
Circle (USDC): A compliant and robust choice
In contrast, USDC follows a compliance route. Issued by the Centre consortium, co-founded by Circle and Coinbase, Circle is a fintech company regulated by U.S. financial regulators (FinCEN) and publishes monthly reserve reports audited by third-party accounting firms (such as Grant Thornton) to demonstrate sufficient dollar reserves. Although USDC's market size is smaller than that of USDT, it is favored in decentralized finance (DeFi) and institutional trading due to its high transparency and compliance.
This is not only a difference between two products but also a strategic bet on the future: one bets on market efficiency and liquidity, while the other bets on institutional trust and compliance as a protective moat.
The 'money-absorbing' logic of stablecoins: cost-free deposits and huge profits
The business model of stablecoin issuers is the clearest and most direct in the crypto industry, centering on cost-free deposits and stable interest spreads. When a user exchanges $100 for 100 stablecoins, this $100 becomes the issuer's reserve. Since stablecoins do not pay interest to users, the issuer effectively receives a cost-free deposit. These funds are then invested in U.S. Treasuries, repurchase agreements, and other highly liquid, low-risk assets to earn stable interest returns.
Under a capital pool of hundreds of billions, this model has turned into a continuously operating profit machine: stable returns, controllable risks, almost the most predictable business model in the crypto industry.
For example, in Tether's asset portfolio, cash equivalents like U.S. Treasuries account for over 80%, Bitcoin 5%, with the rest distributed among corporate bonds, precious metals, and secured loans. By the second quarter of 2025, Tether's holdings of U.S. Treasuries reached $127 billion (with direct holdings of $105.5 billion and indirect holdings of $21.3 billion), surpassing South Korea's $124.2 billion, ranking 18th globally.
The significance of this holding structure lies not only in the profitability of the stablecoin market but also in its position within the dollar liquidity cycle. Stablecoins provide global users with immediate access to dollars while channeling these funds back into the U.S. Treasury market, creating a cycle of 'dollars-on-chain-Treasuries.' This channel enhances global demand for U.S. Treasuries but may also amplify liquidity fluctuations in extreme cases, as the redemption demands for stablecoins are more immediate and concentrated than traditional bank deposits.
Circle, on the other hand, shows a more conservative asset allocation: 44% in U.S. Treasuries, 44% in Treasury repurchase agreements, and 15% in bank deposits. As of June 30, 2025, its total U.S. Treasuries and repurchase agreements amounted to approximately $54 billion. (-3% is a temporary discrepancy during transactions or settlements, which typically balances out in the short term and does not pose a significant threat to overall reserve stability.) This configuration aligns more closely with traditional financial institutions' risk management logic, indicating a relatively stable balance between short-term payouts and interest income.
Financial performance: The other side of profit
According to the financial data for the second quarter of 2025, Tether's total assets reached $162.57 billion, total liabilities (from token issuance) were $157.11 billion, resulting in a net asset of approximately $5.47 billion, with shareholder equity remaining stable. In just the second quarter, Tether achieved a net profit of $4.9 billion, with cumulative profits of $5.7 billion for the first half of the year, of which $3.1 billion came from recurring profits and $2.6 billion from the appreciation of gold and Bitcoin holdings. This indicates that a significant proportion of its profit structure relies on asset price fluctuations. Although the current market environment is favorable, valuation gains may shrink rapidly in the event of a market reversal.
Circle exhibits more 'bank-like' financial characteristics—by June, total assets were $61.39 billion, total liabilities $61.33 billion, with assets slightly above liabilities. According to data from tokenterminal.com, the protocol's revenue over the past year reached $1.9 billion, primarily from interest income on U.S. Treasuries and repurchase agreements, with almost no reliance on high-volatility assets. This model is highly attractive in the current high-interest-rate environment, but if the U.S. enters a rate-cutting cycle, income pressure may increase.
On July 18, 2025, U.S. President Trump signed the GENIUS Act, setting new boundaries for the stablecoin industry, marking a turning point for stablecoins from marginal innovation to mainstream finance. This legislation is not only a response to industry expansion but also reflects the U.S. intention to incorporate stablecoins into its 'digital dollar' strategic map.
For compliant issuers like Circle, the legislation means an expansion of market space; for Tether, the advantages of a global market may face challenges due to pressure for reserve transparency and compliance standards. Regardless of the final outcome, stablecoins are becoming tools for extending dollar hegemony in the digital age and laying down new variables for the global financial system.
