Tether’s USAT Stablecoin Emerges as a Potential Challenger to Circle’s USDC in the U.S. Market

Tether has officially entered the U.S. regulated stablecoin arena with the launch of USAT, a new dollar-backed digital asset designed specifically for institutional adoption. Developed in partnership with federally chartered Anchorage Digital and financial services firm Cantor Fitzgerald, USAT represents Tether’s first attempt to compete directly in the compliance-heavy U.S. market long dominated by Circle’s USDC.

For years, USDC has positioned itself as the preferred stablecoin for banks, fintech companies and U.S.-regulated crypto exchanges, emphasizing transparency, regulatory alignment and institutional trust. While USDC’s market capitalization stands at around $72 billion, far below Tether’s flagship USDT at roughly $186 billion, USDC has seen faster growth in recent years, particularly within the U.S. financial system.

Analysts say USAT could be the first credible domestic competitor to USDC if it succeeds in attracting institutional users. According to Noelle Acheson, author of the Crypto Is Macro Now newsletter, USAT is intentionally built as an institutional-grade stablecoin and targets many of the same clients that currently rely on USDC. The involvement of Anchorage Digital, a well-known crypto-native bank, along with Cantor Fitzgerald, adds traditional finance credibility that could appeal to compliance-focused firms.

Another potential advantage is USAT’s connection to Tether’s global ecosystem. Institutions may be able to benefit from seamless conversion between USAT and USDT, giving them access to Tether’s extensive international liquidity network. Additionally, the participation of former White House official Bo Hines could help ease lingering concerns around Tether’s reserve transparency, a long-standing issue for some institutional investors.

However, not all analysts believe USAT will significantly disrupt USDC’s position in the near term. ClearStreet analyst Owen Lau described the competitive risk to Circle as manageable, noting that it is still too early to measure real market impact. There is also the possibility that USAT could cannibalize some demand for USDT, potentially creating internal competition within Tether’s own stablecoin lineup.

Still, industry observers argue that USAT’s launch highlights a broader trend: growing demand for regulated U.S. dollar tokens following recent stablecoin legislation. If USAT gains traction, it could reshape the competitive dynamics of the U.S. stablecoin market and mark a new chapter in the rivalry between Tether and Circle.