Tether ranked 18th in the world as the holder of the big American bond, a full analysis of the stablecoin

Written by: Dingdang, Odaily Planet Daily

Recently, the latest data disclosed by Tether shows that the scale of U.S. Treasury bonds it holds has exceeded $120 billion. This figure not only surpasses the holdings of sovereign countries such as the United Arab Emirates and Germany but also pushes a stablecoin issuer to the position of the 18th largest holder of U.S. debt globally.

For those familiar with the crypto market, this number is astonishing; in the eyes of traditional finance, it is more like a structural "financial crustal movement." Some views hold that stablecoin issuers such as Circle and Tether are devouring more U.S. Treasury bonds than most countries, which may reshape the U.S. economy.

In the eyes of supporters, this is a new extension of dollar hegemony: through on-chain liquidity and global payment networks, stablecoins provide an unprecedented grasp for the U.S. dollar to consolidate its dominant position in international trade and digital assets. However, critics warn that even if stablecoins account for only a small part of the entire market, they may cause financial instability in the banking industry. Because stablecoins may siphon funds from bank deposits, and since deposits are necessary liquidity for loans, stablecoins are likely to threaten the credit system.

Prosperity and Oligopoly Pattern of the Stablecoin Market

The stablecoin market is in a period of liquidity prosperity. According to data from stablecoins.asxn.xyz, the total market value of global stablecoins has soared to $269.73 billion, a record high. Among them, Tether's USDT ranks first with a market value of $164.49 billion, followed by Circle's USDC with $64.97 billion. Together, the two account for more than 85% of the market share, forming an obvious oligopoly pattern.

What's more interesting is that under the highly concentrated pattern, the innovative vitality of the market has not been suppressed. Since 2024, the total number of stablecoins has increased to 282. From on-chain payments to cross-border settlements, various new scenarios continue to spawn new categories.

In terms of the market value curve, USDT has steadily risen. The growth rate of USDC has slowed down since May 2025, while the decentralized stablecoin USDe recorded a monthly increase of more than 75% in July, becoming a "dark horse" that stirs up the pattern.

USDT and USDC: Two Routes, Two Logics

Although both USDT and USDC promise to be anchored to the U.S. dollar at a 1:1 ratio, they have chosen completely different directions in terms of development paths and brand positioning.

Tether (USDT): A Controversial Pioneer of Marketization

USDT is issued by Tether Limited, registered in Hong Kong and headquartered in Switzerland, and dominates the stablecoin field with a market-oriented route. With a wide range of trading pairs and huge circulation, USDT has become the most commonly used stablecoin in the crypto market, even maneuvering freely in gray areas. However, its reserve transparency has long been criticized. In October 2021, Tether was fined $41 million by U.S. regulators over reserve issues. Despite regularly releasing reserve reports, the lack of audit frequency and details still makes the market doubt its credibility.

Circle (USDC): A Steady Choice for Compliance

In contrast, USDC takes a compliance route. Issued by the Centre Consortium co-founded by Circle and Coinbase, Circle, as a fintech company regulated by the U.S. financial regulator (FinCEN), releases monthly reserve reports audited by third-party accounting firms (such as Grant Thornton) to prove that its U.S. dollar reserves are sufficient. Although the market size of USDC is not as large as that of USDT, it is favored in decentralized finance (DeFi) and institutional transactions due to its high transparency and compliance.

This is not only the difference between two products but also two strategic bets on the future: one bets on market efficiency and liquidity, and the other bets on institutional trust and compliance moats.

The "Money-Attracting" 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, with the core being cost-free deposit collection and stable interest spreads. When a user exchanges $100 for 100 stablecoins, the $100 becomes the issuer's reserve. Since stablecoins do not pay interest to users, the issuer is equivalent to obtaining a cost-free deposit. Then, these funds are invested in high-liquidity, low-risk assets such as U.S. Treasury bonds and repurchase agreements to earn stable interest returns.

Under the fund pool of hundreds of billions of dollars, this model has become a profit machine that operates continuously: with stable returns and controllable risks, it is almost the most predictable business model in the crypto industry.

For example, in Tether's asset portfolio, cash equivalents such as U.S. Treasury bonds account for more than 80%, Bitcoin accounts for 5%, and the rest are distributed in corporate bonds, precious metals, secured loans, etc. By the second quarter of 2025, Tether's holdings of U.S. bonds reached $127 billion (direct holdings of $105.5 billion and indirect holdings of $21.3 billion), surpassing South Korea's $124.2 billion, ranking 18th in the world.

The significance of this holding structure lies not only in the profitability of the stablecoin market but also in its position in the U.S. dollar liquidity cycle. Stablecoins provide global users with instant access to U.S. dollars, and at the same time, these funds flow back to the U.S. Treasury bond market, forming a "U.S. dollar - on-chain - U.S. bonds" circulation channel. This channel enhances the global demand for U.S. bonds but may also amplify liquidity fluctuations in extreme cases because the redemption demand for stablecoins is more immediate and concentrated than traditional bank deposits.

Circle is more prudent in asset allocation: 44% are U.S. Treasury bonds, 44% are Treasury repurchase agreements, and 15% are bank deposits. As of June 30, 2025, its total Treasury bonds and repurchase agreements were approximately $54 billion. (-3% is a temporary difference in transactions or settlements, which usually balances in the short term and does not pose a significant threat to the stability of overall reserves.) This allocation is closer to the risk management logic of traditional financial institutions, which also means that it will achieve a relatively stable balance between short-term redemption and interest spread income.

Financial Performance: The Other Side of Profits

According to the financial data for the second quarter of 2025, Tether's total assets reached $162.57 billion, total liabilities (token issuance) were $157.11 billion, net assets were approximately $5.47 billion, and shareholder capital remained stable. In the second quarter alone, Tether achieved a net profit of $4.9 billion, with cumulative profits of $5.7 billion in the first half of the year, of which $3.1 billion came from recurring profits, and $2.6 billion came from valuation appreciation of gold and Bitcoin holdings. This means that a considerable proportion of its profit structure depends on asset price fluctuations. Although the current market environment is favorable, when the cycle reverses, valuation gains may shrink rapidly.

Circle shows more "bank-like" financial characteristics - as of June, total assets were $61.39 billion, total liabilities were $61.33 billion, and assets were slightly higher than liabilities. According to data from tokenterminal.com, the protocol revenue in the past year reached $1.9 billion, mainly from interest income from Treasury bonds and repurchase agreements, with almost no reliance on highly volatile assets. This model is very attractive when interest rates are high, but if the U.S. enters an interest rate cut cycle, revenue pressure may rise.

On July 18, 2025, U.S. President Trump signed the GENIUS Act, setting new boundaries for the stablecoin industry, which is also 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. attempt to incorporate stablecoins into the "digital dollar" strategic territory.

For compliant issuers like Circle, the bill means the expansion of market space; for Tether, its global market advantages may face challenges due to the pressure of reserve transparency and compliance standards. No matter how it ends up, stablecoins are becoming an extension tool of dollar hegemony in the digital era and also埋下 new variables for the global financial system.

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