Beyond Tether and Circle: The New Wave of Stablecoin Issuers Reshaping the Market

For most of the stablecoin market's history, two issuers controlled nearly everything. Tether's USDT and Circle's USDC together held roughly 89% of total stablecoin supply as recently as mid-2025. That share has now dropped below 84%, and the trajectory points toward further erosion. The new stablecoin issuers driving this shift include payment giants, cross-border settlement networks, crypto-native firms, and a consortium of 21 major banks.

What changed? Two things converged: the GENIUS Act created a federal regulatory framework for stablecoin issuance, and Tether's public financials revealed just how profitable the business is. Together, these catalysts have turned stablecoin issuance from a niche crypto operation into a mainstream financial opportunity.

Why Everyone Wants to Issue a Stablecoin

Tether reported over $10 billion in net profit for 2025, with some projections reaching $15 billion. Circle, which went public on NASDAQ in 2025, reported $2.75 billion in full-year revenue, up 64% year-over-year. The business model is straightforward: accept dollars from users, invest the reserves in short-term U.S. Treasuries, and keep the interest. With over $183 billion in USDT outstanding and Treasury yields above 4%, the math is compelling.

The near-zero marginal cost of servicing additional stablecoin supply makes the economics unusual even by fintech standards. Tether's Q2 2025 profit alone was $4.9 billion. For comparison, Visa's net income for the same quarter was $5.1 billion, but Visa employs over 30,000 people. Tether has fewer than 200. This margin structure has attracted every large financial institution with a distribution network and regulatory license.

The reserve yield equation: A stablecoin issuer holding $1 billion in reserves at 4.5% Treasury yields earns $45 million annually with minimal operational overhead. At $10 billion in circulation, that becomes $450 million. The revenue scales linearly with supply while costs remain largely fixed.

The GENIUS Act: Regulatory Clarity Unlocks Entry

The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) passed the Senate on June 17, 2025, cleared the House on July 17, and was signed into law on July 18, 2025, with full implementation effective January 18, 2027. The law establishes a federal licensing framework for Permitted Payment Stablecoin Issuers (PPSIs) and creates clear requirements that well-capitalized institutions can meet.

Key provisions shaping the competitive landscape

• Limits issuance to licensed PPSIs and qualifying foreign issuers, clearing out smaller, less-capitalized competitors
• Mandates 1:1 reserve backing in cash or short-term U.S. Treasuries
• Requires monthly reserve disclosures and independent audits
• Provides bankruptcy-remote treatment of customer reserves, protecting holders if the issuer fails
• Preserves state-level regulatory pathways alongside the federal framework
• Prohibits interest or yield payments on idle stablecoin balances, though activity-based rewards remain permitted

The effect has been paradoxical: the law raised the bar for entry while simultaneously making it easier for established institutions to enter. Banks, payment companies, and licensed trust companies already meet most of the regulatory requirements. What they lacked was legal certainty.

Profiling the New Wave of Stablecoin Issuers

PayPal: distribution as competitive advantage

PayPal's PYUSD launched in August 2023 and has grown to approximately $2.77 billion in market cap as of September 2026, ranking seventh among all stablecoins. The token peaked above $4 billion in Q1 2026 before contracting. Issued by Paxos Trust Company on PayPal's behalf, PYUSD operates on Ethereum, Solana, Arbitrum, and Polygon.

PayPal's competitive advantage is obvious: 430+ million active accounts and existing integrations with millions of merchants. In December 2025, PayPal partnered with YouTube to enable U.S. creators to receive payouts in PYUSD. In February 2026, the company launched the PYUSDx Development Framework, allowing developers to build custom stablecoins backed by PYUSD reserves. By March 2026, PYUSD was available to users across 70 markets worldwide.

PayPal has also reorganized internally, consolidating its stablecoin operations into a new Payment Services and Crypto division that aligns PYUSD with Braintree's merchant processing stack. This signals a longer-term strategy: using PYUSD not just as a consumer product but as settlement infrastructure for PayPal's merchant network.

Ripple: the cross-border play

Ripple launched RLUSD in December 2024 after securing NYDFS approval on December 10. The stablecoin has since grown to approximately $2.38 billion in market cap, ranking eighth overall. RLUSD crossed $1 billion by November 2025, hit $1.26 billion by year-end, and reached $1.78 billion by May 2026.

Issued by Standard Custody and Trust Company (a Ripple subsidiary with a New York trust charter), RLUSD is backed 1:1 by cash and short-term U.S. Treasuries, with BNY Mellon serving as primary custodian. Monthly reserve attestations are published. Ripple also secured approval from Abu Dhabi's ADGM Financial Services Regulatory Authority in November 2025, positioning RLUSD for Middle Eastern cross-border corridors.

Ripple's angle is institutional cross-border settlement. Its existing network of bank and payment provider relationships, built over a decade of selling RippleNet for correspondent banking replacement, gives RLUSD a distribution path that pure-crypto stablecoins lack. RLUSD is listed on Uphold, Bitstamp, Bitso, MoonPay, Bullish, and several other exchanges.

Paxos Global Dollar Network: sharing the yield

Paxos has taken a fundamentally different approach with its Global Dollar Network and USDG stablecoin, launched in November 2024. Rather than keeping all reserve income, Paxos shares the yield with distribution partners: Robinhood, Kraken, Anchorage Digital, Bullish, Galaxy, and Nuvei. This yield-sharing model gives exchanges and wallets a direct financial incentive to promote USDG over competing stablecoins.

USDG has grown to approximately $3.21 billion in market cap by September 2026, ranking sixth overall with notably high trading volume relative to its supply. Paxos itself converted from a state trust company to a national trust bank supervised by the OCC in December 2025, and expanded USDG issuance to the EU via a MiCA-regulated entity (Paxos Issuance Europe, supervised by Finland's FIN-FSA), reaching 450+ million consumers across 30 EU countries.

Distribution economics matter: Circle reportedly pays Coinbase a significant revenue share for USDC distribution: by some accounts, Coinbase earns more from the arrangement than Circle does. Paxos's USDG formalizes this dynamic, offering yield-sharing as an explicit feature rather than a negotiated deal. For exchanges weighing which stablecoin to promote, the financial calculus favors whichever issuer shares the most revenue.

World Liberty Financial USD1: the political entrant

USD1, issued by the Trump-affiliated World Liberty Financial, has grown rapidly to approximately $4.17 billion in market cap, making it the fifth-largest stablecoin globally. It received a conditional trust charter license from the OCC and expanded to the Canton Network for institutional settlement.

The token has been controversial. It experienced a brief depeg to $0.994 in February 2026. Lending pool incidents on Dolomite, where WLFI borrowed against its own governance token, pushed utilization to near-100% and temporarily trapped depositors. Political scrutiny from Democratic lawmakers over potential conflicts of interest has been persistent. Despite these issues, USD1 continues to grow, trading over $1 billion daily.

Yield-bearing challengers

A separate category of new entrants offers something traditional stablecoins cannot: yield passed through to holders. Ondo Finance's USDY, backed by short-duration U.S. Treasuries and bank deposits, has grown to approximately $2.15 billion in supply with a 4.65% APY. It operates on Ethereum, Solana, Mantle, Sui, Aptos, and Stellar. Mountain Protocol's USDM offers a 5.00% APY through a daily rebasing mechanism.

Ethena's USDe takes an entirely different approach as a synthetic dollar backed by delta-hedged crypto positions rather than fiat reserves. At $4.24 billion in market cap, USDe ranks fourth among all stablecoins. These yield-bearing instruments occupy a distinct regulatory category under the GENIUS Act, which prohibits yield on "payment stablecoins" but does not govern all dollar-denominated tokens.

Banks Enter the Stablecoin Race

The most significant long-term shift may be the entry of traditional banks. In June 2026, a consortium of 21 major banks announced plans for a Clearing House tokenized deposit network, joining an Open USD consortium of approximately 140 organizations. The group, which includes Citi, Goldman Sachs, Bank of America, and UBS, plans to launch a USD-denominated token in H1 2027.

This follows earlier moves by individual banks. JPMorgan's Kinexys platform (formerly JPM Coin) has been processing institutional settlement since 2020 and expanded to the Base blockchain in late 2025. Societe Generale's FORGE unit operates both a euro stablecoin (EURCV, approximately $97 million in circulation) and a USD stablecoin (USDCV, launched June 2025). In Europe, the Qivalis consortium of 37 banks from 15 countries is developing a euro-denominated stablecoin for H2 2026.

Banks are pursuing what analysts call a "dual-track strategy": tokenized deposits to protect their existing $6.6 trillion deposit base, and public blockchain stablecoins to compete in the broader market.

Competitive Advantages Compared

Each category of new issuer brings a distinct competitive moat that the Tether-Circle duopoly lacks.

Market Share Trajectory: The Duopoly Erodes

The total stablecoin market has grown from approximately $27 billion at the end of 2020 to over $315 billion by mid-2026: nearly a twelvefold increase. But the composition of that market is shifting. USDT and USDC combined now hold roughly 82% of total supply, down from approximately 89% a year earlier. The remaining 18%, representing over $55 billion in circulation, is split among a growing number of competitors.

USDC has been growing faster than USDT: 73% versus 36% in 2025. USDC also captures 60-70% of adjusted on-chain transaction volume despite trailing USDT in total supply, reflecting deeper DeFi integration and institutional usage patterns. Meanwhile, USDT slightly contracted in early 2026, with Tether burning 6.5 billion tokens in January and February.

What Drives Issuer Growth: Distribution, Not Technology

A pattern emerges from comparing successful new entrants: the stablecoins that grow fastest are those with the strongest distribution channels, not the best technology. Every major stablecoin uses the same basic mechanism: fiat-backed reserves invested in Treasuries, with tokens minted on public blockchains. The differentiation lies in who can put those tokens in front of users.

• PayPal reaches 430+ million consumers and millions of merchants through existing payment flows
• Ripple leverages a decade of bank and payment provider relationships built through RippleNet
• Paxos incentivizes exchanges directly through reserve yield-sharing, turning Robinhood and Kraken into motivated distribution partners
• Banks have captive deposit bases and existing regulatory trust from customers

This suggests the stablecoin market's future will be shaped less by blockchain architecture decisions and more by business development, regulatory relationships, and network effects in traditional finance.

Consolidation or Fragmentation?

The stablecoin market faces a fundamental tension. On one hand, network effects favor consolidation: merchants, exchanges, and liquidity pools benefit from standardizing on a small number of stablecoins. Deeper liquidity means tighter spreads and better execution for everyone. On the other hand, regulatory fragmentation, institutional preferences, and use-case specialization push toward a multi-issuer market.

Forces favoring consolidation

• Liquidity network effects: a stablecoin with $100 billion in circulation offers better exchange depth than one with $2 billion
• Regulatory compliance costs create barriers to entry that favor large, well-capitalized issuers
• Merchant and exchange integration costs make it impractical to support dozens of stablecoins

Forces favoring fragmentation

• Geographic regulation: the GENIUS Act governs U.S. issuers, MiCA governs European issuers, and other jurisdictions will create their own frameworks
• Institutional preferences: banks may prefer to settle in a bank-issued stablecoin rather than one issued by Tether
• Yield competition: issuers sharing reserve yield with partners create switching incentives that prevent any single issuer from capturing the entire market
• Use-case specialization: cross-border settlement, consumer payments, DeFi collateral, and institutional clearing each have different requirements

The most likely outcome is a tiered structure: two or three dominant issuers for general-purpose use, a tier of specialized stablecoins for specific corridors or use cases, and a layer of bank-issued tokens for institutional settlement. This is broadly analogous to how traditional payment rails work, where Visa and Mastercard dominate consumer payments while SWIFT, Fedwire, and domestic RTGS systems handle institutional flows.

What Multi-Issuer Markets Mean for Infrastructure

A world with five, ten, or twenty significant stablecoins creates both opportunities and challenges for payment infrastructure. Users and merchants need the ability to receive, hold, and convert between stablecoins without friction. This requires payment layers that are stablecoin-agnostic: infrastructure that can support any issuer on any chain.

The parallels to multi-currency payment processing are clear. Just as cross-border merchants need payment processors that handle dollars, euros, and yen, crypto-native payment infrastructure needs to handle USDT, USDC, PYUSD, RLUSD, and whatever bank-issued tokens follow. The value shifts from the stablecoin itself to the infrastructure layer that routes between them.

This is where Bitcoin Layer 2 protocols like Spark become relevant. Spark's architecture supports native token issuance and enables stablecoins like USDB to settle instantly with self-custodial guarantees. As the number of stablecoin issuers grows, chain-agnostic settlement infrastructure that can process any dollar-denominated token becomes more valuable than infrastructure tied to a single issuer or chain. Wallets built on Spark, like General Bread, can offer users access to multiple stablecoin options with instant settlement on Bitcoin's security model.

The Road Ahead

The stablecoin market is entering a phase of rapid expansion and competitive restructuring. Federal Reserve staff estimates project total stablecoin uptake reaching $1 to $3 trillion by the end of the decade. If accurate, the revenue pool available to issuers could exceed $50 billion annually at current Treasury yields. That prize is large enough to sustain dozens of issuers, not just two.

The next 18 months will be pivotal. The GENIUS Act's full implementation in January 2027 will formalize which issuers qualify and which do not. The 21-bank consortium plans its token launch in H1 2027. Europe's Qivalis group targets H2 2026 for its euro stablecoin. And incumbents are not standing still: Tether holds $141 billion in U.S. Treasury exposure and maintains an $8.23 billion reserve buffer, while Circle's adjusted EBITDA more than doubled to $582 million in 2025.

For builders and users, the key takeaway is that the era of a two-stablecoin market is ending. The infrastructure decisions made now: which stablecoins to integrate, which chains to deploy on, how to handle cross-stablecoin swaps and settlement: will determine who captures value in the multi-issuer future. Developers building on Bitcoin Layer 2 infrastructure can explore stablecoin integration paths in the Spark documentation. For a deeper look at how USDT and USDC compete on metrics, chain deployment, and market positioning, see our analysis of stablecoin competitive dynamics.

This article is for educational purposes only. It does not constitute financial or investment advice. Bitcoin and Layer 2 protocols involve technical and financial risk. Always do your own research and understand the tradeoffs before using any protocol.