Tether and USDC together account for 90% of the total stablecoin market value.
While Tether and USDC have similar use cases, USDC appears to be increasingly favored by U.S. businesses.
USDC has clear advantages over Tether when it comes to regulatory and compliance issues.
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The global stablecoin market will grow by 50% in 2025, but two stablecoin giants continue to dominate the industry: tether(Cryptocurrency: USDT) and U.S. Department of Agriculture(Cryptocurrency: USDC). According to the latest research from Motley Fool Stablecoins, they account for 90% of the total value of all stablecoins.
This brings up an obvious question for cryptocurrency investors: Which stablecoin is better to buy right now, Tether or USDC?
To answer this question, remember that these two stablecoins are not traditional investments. They are digital currencies that are pegged 1:1 to the U.S. dollar, so they are often called “digital dollars.” At any time, investors can exchange between physical and digital dollars, making it easy to transfer funds in and out of the cryptocurrency market.
Image source: Getty Images.
Pegging to the U.S. dollar has very important implications. In one year, the price of both Tether and USDC will be exactly $1. In five years, the price of both will be exactly $1. In 10 years, the price of both will be exactly $1.
You can easily see this in USDC’s five-year chart. While there is some degree of “volatility” around the $1 mark, the long-term average price is $1.
However, if you just buy and hold stablecoins without using them in the blockchain world, you won’t make any money from your investment. It’s kind of like taking physical dollars and hiding them under the bed.
This is why choosing the “best” stablecoin should be based on utility. In other words, what can stablecoins actually do?
The core use case for stablecoins is to earn passive income. Just as you can earn a modest annual return by depositing physical dollars in a bank, you can earn a modest annual return by keeping digital dollars on the blockchain. On some cryptocurrency trading platforms, you can earn between 3.5% and 5.25% per year on your stablecoin investment.
Stablecoin investors can obtain higher returns through decentralized finance (DeFi), such as participating in DeFi lending protocols or liquidity mining. Here, the yield can be as high as 15%, but you also take on more risk.
Stablecoins can also be used for purchases on a growing number of online platforms. When checking out, just scroll through the payment options until you see the option to pay via stablecoin. this Shopping For example, e-commerce platforms have recently adopted Coinbase Global.
Admittedly, the use cases for Tether and USDC are basically the same. It’s really just a matter of where you shop, spend and invest your cryptocurrency. For example, I have always preferred USDC because it is a stablecoin supported by Coinbase.
However, USDC has clear advantages over Tether when it comes to regulation. This is because USDC is supported Circle Internet Groupa U.S. listed company. In contrast, the Tether stablecoin is backed by Tether Limited, which is currently based in El Salvador (previously the British Virgin Islands and Hong Kong).
Now that the US has passed the new Stablecoin Genius Act, regulatory compliance is critical. Therefore, large financial institutions and large companies within the United States may continue to favor USDC over Tether. In short, Tether is not subject to the same level of regulatory scrutiny as USDC, making it slightly riskier.
There’s no denying that Tether still has twice the market cap of USDC and is easily the non-US world’s favorite stablecoin. If the goal was just to exchange different cryptocurrencies, I could see the value in Tether. There is more liquidity, so there is much less “volatility” surrounding the USD peg. For active short-term traders, Tether may be a better choice.
However, the perfect stablecoin does not exist. This helps explain why so many different companies and financial institutions are trying to launch their own stablecoins. They are trying to solve some core user needs. if you are an active person PayPal For example, users might consider the new PayPal stablecoin, which currently has a market cap of $3.6 billion.
But for USD, I think USDC is the best stablecoin to buy right now. It’s easy to buy and sell, there are plenty of opportunities to earn money, and it’s becoming increasingly common as a payment method at checkout. If you’re looking to convert physical dollars to digital dollars, USDC might be worth a closer look.
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Dominic Basulto works at Circle Internet Group and USDC. The Motley Fool owns and recommends PayPal and Shopify. The Motley Fool recommends Coinbase Global and recommends the following options: Long January 2027 $42.50 PayPal calls and short December 2025 $75 PayPal calls. The Motley Fool has a disclosure policy.
Better Stablecoins to Buy: Tether vs USDC Originally published by The Motley Fool
