Tether and Circle account for about 85% of the stablecoin market, raising concentration risk. Stablecoins pose risks of digital dollarisation and settlement issues.
Tether and Circle together account for about 85% of the stablecoin market, creating a high concentration that could amplify systemic risk. The dominance underscores how a few issuers can influence liquidity, settlement, and price stability. Regulators are watching to assess potential resilience implications for the broader financial system.
Analysts warn that such concentration could contribute to digital dollarisation and expose settlement vulnerabilities across crypto and fiat rails. The risks prompt calls for greater transparency, diversification, and robust oversight of stablecoin issuers.
As the market nears the $300 billion mark, policymakers and market participants face a balancing act between innovation and risk management. A coordinated policy response could help reduce concentration risk while preserving payment system efficiency.
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