Circle and Tether: Competition and Regulatory Issues in the US and European Market
Stablecoins are important essential components of the cryptocurrency ecosystem. They play an important role in trading digital assets and storing value, providing investors and users with protection against price volatility. However, these assets also face regulatory uncertainty and market competition. In the US, Circle and Tether are at the center of these issues as the two largest issuers of stablecoins. Both companies compete in the US and European market with different strategies, regulatory views and trading approaches.
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The Basic Role of Stablecoins
Stablecoins are digital assets whose value is usually indexed to a fiat currency, such as the US dollar or the euro. In the highly volatile cryptocurrency market, these coins offer a stable alternative that users can use as a secure store of value. However, the issue of how stablecoins will be supervised by regulators creates a great deal of uncertainty, especially for regulators in the US and authorities in Europe.
Stablecoins have a significant share of the global cryptocurrency market. For example, Tether (USDT) holds more than half of the entire stablecoin market, with a market capitalization of around $142 billion as of 2025. USD Coin (USDC) is in second place with a market capitalization of around $56 billion.
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Different Ways of Circle and Tether
Tether (USDT) is the oldest and most widely used stablecoin on the market. Launched in 2014, USDT has always been claimed to be equivalent to one US dollar. However, questions have constantly been raised about the transparency and reserves behind Tether. In 2021, Tether reported that only 75% of USDT was backed by cash and cash equivalents. This has led to Tether coming under constant scrutiny from regulators. For example, in 2022, under pressure from regulators, Tether announced that it held only 2% of their cash reserves as of the end of 2021. This was interpreted as a lack of transparency in the market and questioned Tether’s credibility. Circle, on the other hand, has adopted a more transparent approach. The company’s stablecoin, USD Coin (USDC), aims to provide a more reliable alternative, especially by cooperating with regulatory authorities. Circle has launched USDC as a fully backed stablecoin with reserves that are constantly audited. Circle’s efforts to ensure transparency and regulatory compliance have made it a major player in the future of regulation in the US. As of 2024, Circle has announced that USDC is backed by 100% of its reserves in cash and cash equivalents. In addition, the company cooperates with US regulators and publishes audit reports every quarter, which is a confidence-building factor for investors and regulators.
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Regulatory Uncertainty in the US
The US has been trying to take important steps in the regulation of stablecoins. In 2022, President Joe Biden organized a workshop on stablecoins and emphasized the need for a more robust regulatory framework for these assets. However, different regulatory agencies have different views on how to approach stablecoins. The US Treasury Department argues that stricter regulations should be introduced to address the potential financial system risks of stablecoins. In this context, companies like Circle could gain a significant advantage in ensuring that stablecoins comply with future regulations. Tether, on the other hand, is subject to increased scrutiny by regulators, as it is not a stablecoin regulated by the US Securities and Exchange Commission (SEC). In 2023, the SEC launched an investigation into some of Tether’s supply and trading-related transactions and called on the company to be more transparent.
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The European Market and Competition
Europe takes a different approach to stablecoin regulation compared to the US. The European Commission proposed the regulatory framework called MiCA (Markets in Crypto-Assets) in 2022. MiCA aims to establish a set of rules for the supervision of digital assets and stablecoins. This regulation was developed to provide a more consistent and transparent legal framework for cryptocurrencies in Europe.
One of the most important innovations that MiCA will bring to stablecoins is to ensure transparency of stablecoin issuers’ reserves and protect user rights. In this context, an easier harmonization process can be foreseen for Circle in Europe. While Circle is notable for its relationships with US regulators on transparency, it may gain an advantage to adapt to the regulatory framework in Europe.
Tether faces similar challenges in the European market. MiCA regulations in particular may make it difficult for the company to resolve past transparency issues. However, Tether’s large worldwide user base and liquidity could help it gain a competitive advantage in Europe as well. At the end of March, several cryptocurrency exchanges decided to delist the Tether (USDT) stablecoin for their users in the European Economic Area (EEA). This decision can be seen as part of regulatory pressure and efforts to adapt to new regulations in Europe. In particular, this step will limit the use of Tether in the EEA region and may drive users to alternative stablecoins. The exchanges’ decision is directly related to MiCA regulations and transparency requirements in Europe. Tether may face stricter regulation in Europe due to past transparency issues and uncertainties regarding its reserves. This change could create opportunities for regulatory compliant stablecoins like Circle, so USDC offers the potential to more easily comply with regulatory requirements, especially in the European market.
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Competition between Circle and Tether
The competition between Circle and Tether is not limited to the US and Europe. Both companies are fighting for a strong foothold in the digital asset market globally. Tether’s strong liquidity worldwide makes it the most widely used stablecoin. However, Circle’s strong efforts in regulatory compliance and transparency could make it more resilient to future regulation. As of 2025, Tether’s daily trading volume is around $40 billion, making it the stablecoin with the highest trading volume in the world. Circle’s USDC, on the other hand, trades around $15 billion in daily trading volume, but paints a stronger image of transparency and regulatory compliance.
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Future Perspectives
The rivalry between Circle and Tether plays an important role in the cryptocurrency world and future regulations for digital assets. Differences in the regulatory approaches of the US and Europe lead both companies to adopt different market strategies. Circle’s strong stance on transparency and regulatory compliance could make it better prepared for future regulation. On the other hand, Tether’s large user base and liquidity could continue to keep it a strong player in almost any market. How regulators handle stablecoins will shape the future success of these two companies. In addition, both companies are expected to compete fiercely with each other on technological innovation and operational efficiency.
In conclusion, Circle and Tether’s competition in the US and Europe will affect not only the future of the two companies, but also the overall structure of the cryptocurrency markets. How both regulations and market dynamics evolve will be shaped by the future strategic moves of these two companies.
