According to analysts, Tether’s new stablecoin USAT could pose the first serious challenge to Circle’s USDC (CRCL) in the US market – if it can convince institutions.
Launched in partnership with federally chartered bank Anchorage Digital and Cantor Fitzgerald, USAT is Tether’s first attempt at a U.S.-regulated dollar token aimed at institutional users.
Tether’s flagship stablecoin, the $186 billion USDT, dominates global cryptocurrency trading and emerging markets. But USAT is entering a busier, more compliance-focused arena in the United States, where Circle has long positioned USDC as the go-to choice for banks, fintechs and exchanges operating under U.S. oversight. USDC has a market cap of $72 billion, less than half of Tether’s USDT, but it has grown twice as fast in the last year.
“I think USAT is a threat to USDC, even though the DNA of Tether and Circle is very different,” said Noelle Acheson, author of the Crypto Is Macro Now newsletter. While Circle has long positioned its token as the stablecoin of choice for regulated financial entities, USAT is clearly designed to compete in that same space, she argued.
“USAT is designed to be institutional grade, seeking to attract customers who would otherwise be happy to use USDC,” she said.
Acheson highlighted several potential benefits: support from Anchorage, partnerships with traditional financial firms like Cantor Fitzgerald, which also provides services to Tether’s USDT, and the potential ability to leverage Tether’s global network through conversion with USDT.
She also noted that the involvement of former White House official Bo Hines in the project could ease concerns about Tether’s long-criticized reserve practices. “This could help institutions overcome their reluctance,” she said.
Nicholas Roberts-Huntley, CEO of Blueprint Finance, argued that Tether’s entry into the United States highlights that “the demand for regulated dollar tokens among banks and fintechs is real” after the stablecoin-focused GENIUS Act took effect. It also shows that the stablecoin market is “moving from size and utility to differential regulatory positioning and institutional trust.”
“USDC operated without a credible domestic competitor because other entrants did not have the size, distribution or regulatory profile to challenge its position,” he said. “The launch of USAT could change that.”
ClearStreet analyst Owen Lau took a more cautious view.
“It is too early to assess the situation at this stage,” he said. “But I think this poses a risk, but a manageable one for CRCL/USDC.”
This could also pose risks for Tether, with the new token eroding USDT’s existing dominance. “There could even be a risk of cannibalization,” he added.
