Combined, Tether and USDC account for 90% of the total value of the stablecoin market.
While the use cases for Tether and USDC are similar, USDC seems to be gaining more traction with US-based businesses.
The USDC has a clear edge over Tether on regulatory and compliance issues.
10 stocks we like better than USDC
The global stablecoin market will grow by 50% in 2025, but two stablecoin giants continue to dominate the industry: Tether(CRYPTO: USDT) and USDC(CRYPTO: USDC). According to the latest Motley Fool stablecoin research, they account for 90% of the total value of all stablecoins.
This leads to an obvious question for crypto investors: Which stablecoin — Tether or USDC — is better to buy right now?
To answer that question, it’s helpful to note that these two stablecoins are not traditional investments. They are digital currencies that are pegged 1:1 to the US dollar, and as a result, are often referred to as “digital dollars”. At any point in time, investors can swap between physical and digital dollars, making it easy to move money in and out of the crypto market.
Image source: Getty Images.
A dollar peg has several important implications. A year from now, both Tether and USDC will be worth exactly $1. Five years from now, both will be worth exactly $1. And 10 years from now, both will be worth exactly $1.
You can easily see this in this five-year chart for the USDC. While there is some amount of “wiggle” around the $1 mark, the long-term average price is $1.
However, if you buy and hold stablecoins without putting them to work in the blockchain world, you won’t make any money on your investment. It’s like taking physical dollars and hiding them under your bed.
Therefore choosing the “best” stablecoin should be based on utility. In other words, what can you actually do with stablecoins?
The main use case for stablecoins is earning passive income. Just as you can earn a normal annual return by keeping your physical dollars in a bank, you can also earn a normal annual return by keeping your digital dollars on the blockchain. On some cryptocurrency trading platforms, you can earn 3.5% to 5.25% per year on your stablecoin investment.
Stablecoin investors can earn even higher returns through decentralized finance (DeFi), such as by engaging in DeFi lending protocols or product farming. Here, the yield can be as high as 15% – but you’re also taking on a lot of risk.
Stablecoins can also be used on a growing number of online platforms to purchase. At the point of checkout, you can scroll through the payment options until you see the option to pay by stablecoin. The Shopify For example, the e-commerce platform recently embraced USDC for online purchases through a new partnership Coinbase Global.
Admittedly, the use cases for Tether and USDC are largely the same. It’s really just a matter of you shopping, spending money, and investing in crypto. For example, I’ve always been partial to USDC because it’s a stablecoin backed by Coinbase.
However, the USDC has a clear edge over Tether when it comes to regulatory oversight. That’s because it’s backed by the USDC Circle Internet GroupA publicly traded American corporation. In contrast, the Tether stablecoin is backed by Tether Limited, a company currently based in El Salvador (and before that, the British Virgin Islands and Hong Kong).
Now that the new Genius Act has been passed for stablecoins in the United States, regulatory compliance is imperative. For that reason, large financial institutions and large corporations within the US will continue to support USDC on Tether. Simply put, Tether is not subject to the same level of regulatory scrutiny as USDC, and that makes it slightly more risky.
Granted, Tether is still twice as big as USDC in terms of market cap, and is easily the non-US world’s favorite stablecoin. If the goal is to simply swap in and out of different cryptocurrencies, I can see the value of Tether. There is greater liquidity, and thus, much less “wiggle” around the dollar peg. For active, short-term traders, Tether is probably a good buy.
However, there really is no such thing as a perfect stablecoin. This helps explain why so many different corporations and financial institutions are looking to launch their own stablecoins. There are some core user needs that they are trying to address. If you are active PayPal Users, for example, may want to consider the new PayPal stablecoin, which now has a $3.6 billion market cap.
But dollar for dollar, I think USDC is the best stablecoin to buy right now. It’s easily available to buy and sell, there are plenty of opportunities to earn a yield, and it’s becoming more common as a payment option at checkout. If you’re looking to convert physical dollars to digital dollars, it might be worth taking a closer look at USDC.
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Dominic Basulto has positions at Circle Internet Group and USDC. The Motley Fool has articles and recommends PayPal and Shopify. The Motley Fool recommends Coinbase Global and recommends the following options: a long January 2027 $42.50 call on PayPal and a short December 2025 $75 call on PayPal. Motley Fool has a disclosure policy.
Better Stablecoin Buy: Tether vs. USDC was originally published by The Motley Fool
