Tether still dominates the stablecoin market, but its 60% market share is gradually shrinking under the pressure of regulators’ favourite – USDC by Circle. USDC supply surged 220% since late 2023, as the token is satisfying the strictest MiCA compliance criteria, potentially also fitting into the upcoming U.S. stablecoin regulation under the GENIUS Act and UK new crypto regime.
April 2026 brings in a fresh wave of crypto legislation initiatives across major “Western world” jurisdictions:
- In Washington, the Federal Deposit Insurance Corporation (FDIC) approved a notice of proposed rulemaking under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act) that would establish a stricter bank-like compliance framework for payment stablecoin issuers, harshening requirements for reserve assets, redemption, capital, AML&KYC, sanction-screening, and other risk management standards. Now open for public proposals, it should be finalized in June.
- The UK government is updating its crypto rules under the Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2026 to make them clearer, more practical, and more competitive globally. Stablecoins that meet UK regulatory standards would not be treated as risky or speculative assets in regular transactions.
- Meanwhile, in the EU, MiCA is moving from the “rollout phase” to the end of transition periods for crypto firms and payment providers and full MiCA authorization required. The EU is also actively pushing for EUR-based stablecoins to avoid extra dollarisation.
What’s happening to the stablecoin market in these circumstances?
Stablecoin Market Overview
Today, stablecoin transactions account for about 75% of total crypto trading volume. Stablecoin’s total transaction volume topped $28 trillion, more than an analogous indicator of major payment networks like Visa and Mastercard combined. Their supply reached a record $315 billion in Q1 2026.
USDT and USDC collectively rule over 85% of the stablecoin market. Tether’s USDT still dominates globally. It holds more than half (60%) of the stablecoin assets trading publicly. However, Circle’s USDC – the second-best stablecoin, is gradually pushing the boundaries. It has grown by over 220% in the last two years, slowly but steadily increasing its market share. Meanwhile, USDT’s circulating supply fell by roughly $1.5 billion in January-February 2026.
One of the main prerequisites of USDC growth is institutional adoption. Organizations choose Circle for B2B corridors, payroll settlement, treasury management, etc. Why so? Because it’s the most regulated stablecoin out there at the moment.
Circle has become the first stablecoin issuer to receive a French license for USDC and EURC under then-emerging MiCA regime. It is most likely to fit under the UK’s crypto regulation umbrella, being more flexible than MiCA as well, once the lawmakers define the rules closer to 2027. In the U.S., where stablecoin laws are soon to be finalized, Circle operates as a regulated financial company with money transmission licenses in separate states and nationwide compliance with AML/KYC rules. Something that could not be said about Tether.
What Makes Tether the Largest Stablecoin by Market Cap
At present, Tether’s (USDT) market capitalization has hit a record high of approximately $188-$189 billion. As the token’s price is pegged to $1, the number of USDT stablecoin units in circulation is also approximately 188 billion. This is, by far, the largest stablecoin supply among existing digital currencies of this type.
Every day, people trade volumes between $65B and $125B in Tether. Yet, this crypto is not registered with any novel legislative regime. Tether is not fully regulated as a licensed stablecoin issuer in any major jurisdiction we discussed, like the US, EU, or UK. However, it’s not illegal either. How is that possible?
Tether makes some effort to maintain some type of legal status in the given countries. It operates through offshore entities (historically based in places like the British Virgin Islands or Hong Kong). The stablecoin issuer does comply with basic AML checks through exchanges that support USDT trading and commits to select regulatory obligations depending on where it is listed. It also publishes reserve attestations rather than full independent audits required from regulated banks or stablecoin issuers. For less-regulated regions, this proof of reserves is sufficient.
The paradox of Tether is that, despite functioning outside strict national licensing frameworks, the stablecoin is globally usable and more flexible than heavily regulated tokens. It can offer greater speed and liquidity, enjoying a strong presence in emerging markets and derivatives trading, where those factors are crucial.
In many places, USDT acts like a parallel dollar system. It can provide fewer onboarding restrictions and fewer delays due to extra checks. Thus, Tether is active in large parts of Asia, Latin America, Africa, and some offshore trading hubs, which might have weak banking access, high currency volatility, and fiat USD capital controls. In that respect, stablecoins like USDT bring both benefits to cross-border money movement and certain risks to national financial systems.
To avoid or minimize those risks, countries all over the globe implement enhanced legislative regimes. Here’s what changes in crypto legislation in April 2026.
FDIC and U.S. Treasury Stablecoin Updates to GENIUS Act
Not only does the FDIC want to set clear rules for stablecoins, but also the U.S. Treasury wants stablecoin companies to follow strict rules to prevent crime like money laundering and sanctions evasion under the GENIUS Act. Here’s what changes for stablecoin issuers in the U.S. once both proposals are taking full effect:
1) Stablecoins must be fully backed (1:1)
- Issuers must hold 100% reserves at all times equal to tokens in circulation
- Only high-quality liquid assets allowed (cash, short-term U.S. Treasuries, overnight repos)
2) Stablecoins must be redeemable within 2 business days
- Users must be able to convert stablecoins into fiat within T+2
- In stress scenarios, redemption can extend up to 7 days
3) Stablecoins cannot pay interest or yield (this provision is still under debate)
- Issuers are prohibited from offering returns to holders
- Applies to both direct interest and indirect incentives
4) Issuers must be licensed (“permitted issuers”)
- Only approved entities (e.g. banks or authorized firms) can issue stablecoins
- Unlicensed issuance becomes effectively restricted
5) Reserves must be segregated and liquid
- Customer backing assets must be kept separate from company funds
- Must be readily convertible to cash at any time
6) Daily monitoring and regular disclosures are required
- Issuers must track reserve sufficiency on a daily basis
- Must publish regular reports on reserves and operations
7) AML/KYC and sanctions compliance is mandatory
- Full financial crime controls required (like banks)
- Includes customer verification and transaction monitoring
8) Issuers must be able to freeze or block transactions
- Systems must support intervention in suspicious or illegal activity
9) Capital requirements apply (on top of reserves)
- Minimum capital (e.g. ~$5M+) required depending on risk profile
- This capital is separate from the customer reserve backing
UK Crypto Regime Differs From U.S. One and Even MiCA, But Stablecoin Issuers Might Need to Follow All Those
The UK’s stablecoin regime is set to come into force in stages. Legislation itself was adopted in early 2026, while the FCA authorisation window is running from late 2026 into early 2027. Full implementation is expected by October 2027. Once in force, the rules will change how stablecoin issuers operate in the UK.
- Stablecoin issuance becomes a regulated activity. Firms will need authorisation from the Financial Conduct Authority (FCA) to issue “qualifying stablecoins,” including companies based outside the UK, if they serve UK customers.
- Full FCA authorisation brings crypto firms dealing with stablecoins in line with traditional financial services firms, requiring robust governance, operational readiness, and compliance frameworks.
- Capital requirements are introduced. Firms must hold sufficient financial resources as a buffer, separate from customer funds backing the stablecoin.
- Full AML and KYC obligations apply. Issuers will need to verify customers, monitor transactions, and report suspicious activity, aligning with standard financial crime compliance expectations.
- Stablecoins are positioned as payment instruments. However, lending and other types of yield-bearing activities are treated as speculative. Issuers involved in custody, trading, or lending must comply across all relevant regulated activities, not just issuance.
- Financial promotions are tightly controlled. Marketing of stablecoin-related services must meet strict standards and, in many cases, be approved by authorised firms.
- Market abuse rules are extended to crypto. Issuers must prevent and monitor for insider trading, manipulation, and improper disclosures.
- Operational resilience becomes mandatory. Firms must demonstrate the ability to withstand disruptions, including cyber incidents and system failures.
Unlike MiCA in the EU, UK crypto regime has less rigid “token design” rules and no stablecoin usage caps (so far). However, the compliance with these more flexible rules is not a walk in the park either. Therefore, stablecoin issuers that provide services across the European continent and the Americas would have to face a set of fragmented rules with different levels of stringency across those jurisdictions.
What Should Firms Like Tether and Circle Do Under Increased Regulatory Pressure?
Stablecoin issuers can adapt to the new regulatory wave by moving closer to traditional financial infrastructure. This means strengthening reserve management (holding fully backed, highly liquid assets), building reliable redemption systems that meet T+2 timelines, and implementing bank-grade AML/KYC and sanctions controls.
Crypto firms will also need to secure licenses across key jurisdictions, align governance and reporting with regulatory expectations, and invest in transparency through regular disclosures and audits. Operational resilience and transaction monitoring capabilities must also be upgraded. In practice, success will depend on becoming multi-jurisdiction compliant while maintaining enough efficiency to compete with less regulated, high-liquidity alternatives. That might become a real challenge for many.
At the same time, not every stablecoin issuer strives to become a partner for regulated financial entities and fintechs. If the company’s target is P2P transfers in emerging markets, minimal compliance at local crypto exchange levels would be enough.
