JPMorgan: New Stablecoins Set to Compete with Circle’s USDC in US Market

TLDR

• JPMorgan analysts report that Circle’s USDC faces growing competition from Tether, Hyperliquid, and fintech companies entering the stablecoin market.
• Tether plans to launch USAT, a stablecoin fully compliant with the GENIUS Act, aiming to enhance institutional trust and reduce reliance on third-party banks.
• Hyperliquid is preparing to introduce USDH, a new stablecoin that could reduce its dependence on Circle’s USDC and impact USDC’s market share.
• Fintech companies like Robinhood and Revolut are developing their own stablecoins, further intensifying the competition for Circle’s USDC.
• Circle is responding to the competition by developing Arc, a stablecoin blockchain designed to optimize USDC for speed, security, and interoperability.

JPMorgan analysts have warned that Circle’s USDC faces “intense” competition as Tether, Hyperliquid, and fintech companies prepare to launch new stablecoins. The analysts, led by Nikolaos Panigirtzoglou, noted that the stablecoin market could become a “zero-sum game” for U.S. issuers unless the broader crypto market expands. They also highlighted the growing competition among stablecoin issuers, which could impact Circle’s market dominance in the near future.

Tether Plans USAT Launch to Strengthen Trust

Tether plans to launch USAT, a stablecoin designed to fully comply with the GENIUS Act in the U.S. JPMorgan analysts pointed out that USAT differs from Tether’s flagship USDT, which is only about 80% compliant with regulations. According to JPMorgan, USAT could help Tether strengthen its institutional trust and avoid risks like those Circle faced during the 2023 Silicon Valley Bank collapse.

Tether intends to store USAT’s reserves with Anchorage Digital, a company with a banking charter. JPMorgan analysts explained that this move could reduce Tether’s reliance on third-party banks, lowering operational costs. Additionally, managing USAT’s reserves in-house allows Tether to retain more yield, which could improve its profit margins.

JPMorgan’s report suggested that USAT’s launch could enhance Tether’s standing in the stablecoin market. The analysts stated that by taking control of its reserves, Tether would also avoid the risks associated with third-party custodians. They noted that this development signals a shift in the stablecoin market, with more players focusing on regulatory compliance and institutional trust.

Hyperliquid’s USDH to Challenge USDC Market Share

Hyperliquid is preparing to introduce USDH, a native stablecoin that will reduce its reliance on Circle’s USDC. The analysts from JPMorgan observed that Hyperliquid’s futures exchange currently accounts for approximately 7.5% of all USDC usage. Once USDH is launched, JPMorgan expects this share to decrease, posing a threat to USDC’s market position.

Hyperliquid’s shift to USDH represents a significant move in the stablecoin market, according to JPMorgan. The analysts noted that Hyperliquid’s decision to move away from USDC could impact Circle’s dominance. As more competitors like Hyperliquid launch their own stablecoins, USDC’s market share may shrink further.

The analysts concluded that Hyperliquid’s stablecoin could add pressure on Circle. By offering an alternative to USDC, Hyperliquid aims to capture market share and challenge Circle’s position in the crypto ecosystem. This growing competition highlights the shift toward a more fragmented and competitive stablecoin market.

Robinhood and Revolut Join Stablecoin Race

In addition to Tether and Hyperliquid, fintech companies like Robinhood and Revolut are developing their own stablecoins. JPMorgan’s analysts pointed out that these companies could add even more competition to Circle’s USDC. With new entrants preparing to launch their own stablecoins, Circle faces significant pressure in the near future.

JPMorgan noted that the entry of Robinhood and Revolut could further fragment the stablecoin market. As more fintech companies launch their stablecoins, they could challenge USDC’s market position. According to the analysts, these fintechs aim to capture liquidity advantages and market share, making the competition even more intense.

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