Key Takeaways
- In the USDC versus USDT rivalry, Wall Street institutions overwhelmingly favor Circle’s stablecoin.
- For example, BlackRock’s partnership with Circle creates new real-world asset (RWA) yield opportunities for stablecoin investors.
- Even without the institutional support, there are a growing number of RWA yield opportunities for USDT.
Among the Wall Street giants that dominate the world of traditional finance (TradFi), U.S.-listed Circle and its flagship stablecoin, USDC, are widely favored over Tether and USDT.
Despite institutional resistance, many projects are nonetheless forging ahead to build real-world asset (RWA) utility for USDT.
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Tether vs. Circle
Ever since Tether launched USDT in 2014, institutional players have viewed the world’s most popular stablecoin with suspicion.
The reasons for this are multiple.
For starters, Tether’s offshore structure keeps U.S. regulatory oversight at arm’s reach and creates a potential compliance gap.
Incorporated in the British Virgin Islands and El Salvador, the firm tends to channel its dollar transactions through Taiwan and the Bahamas.
A string of investigations between 2021 and 2023 further damaged Tether’s credibility, with the U.S. Department of Justice (DOJ), the Commodity Futures Trading Commission (CFTC), and the New York Attorney General leveling various charges against the stablecoin giant.
Finally, there have been recurring questions over Tether’s USDT reserves, with the company often accused of lacking transparency.
In contrast, when Circle launched USDC in 2018, it did so from the U.S., positioning the new stablecoin as a more transparent, regulated alternative to USDT, without any of the baggage.
At first, Circle’s positioning was mostly rhetorical. However, as Wall Street started to embrace stablecoins in the 2020s, institutions showed a strong preference for USDC.
Wall Street Backs USDC
A pivotal moment came in 2024, when BlackRock teamed up with Circle to let investors in its BUIDL tokenized money market fund buy and redeem shares with USDC via a smart contract.
Other TradFi titans that have actively engaged with Circle include BNY Mellon, Fidelity, and Goldman Sachs, setting the stage for USDC to become the stablecoin of choice for the booming tokenized RWA market.
With Circle now listed on the Nasdaq, widespread USDC favoritism is only likely to grow.
However, although major institutions have largely shunned Tether, USDT has still secured a foothold in the space.
Stablecoins and RWA Yields
Traditionally, generating a return on stablecoins was only possible via DeFi protocols.
Although both USDC and USDT are backed by interest-earning U.S. Treasuries, returns on stablecoin reserves aren’t shared with end-users. And doing so is likely to be explicitly banned under the forthcoming GENIUS Act.
Nevertheless, through initiatives like the BUIDL-USDC integration, investors can grow their pot of stablecoins with RWA returns.
While Tether has no comparable partnership, third-party platforms have forged ahead, integrating USDT into various RWA investment schemes.
For instance, on July 4, OpenTrade added support for USDT to its Money Market Fund-backed yield vault.
Another example is SkyLink—a multichain RWA yield protocol developed by Plume Network.
Although SkyLink supports both USDC and USDT deposits, its recent expansion to TRON could dramatically increase USDT exposure. As of July 8, over half of all USDT is issued on TRON.
As TradFi-DeFi integration advances, and with many expecting a downturn in the crypto market before the end of the year, secure, predictable RWA yields are increasingly attractive for stablecoin investors.
At the level of institutional partnerships, USDC has the lead, but at the cutting edge of fintech innovation, USDT is still a major force.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
