01-28-2026 
|
Getting your Trinity Audio player ready...
|
Tether has finally released its U.S.-compliant stablecoin in what could prove the first real challenge to the U.S. market dominance of rival Circle (NASDAQ: CRCL).
- USAT launches as U.S. rival to USDC
- Tether’s reputational issues aren’t going away
- McKinsey: payments are a tiny fraction of stablecoin volume
- Afghan stablecoin rails helping international aid efforts
- Stablecoin infrastructure M&A not slowing down
On Tuesday, Tether announced the official launch of USAT, the “federally regulated, dollar-backed stablecoin developed specifically to operate within the United States’ new federal stablecoin framework established under the GENIUS Act.”
USAT is issued by Anchorage Digital, the first crypto firm to be issued a U.S. national bank charter way back in 2021 (although that club has recently become a lot less exclusive). As Anchorage is overseen by the U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC), the company says USAT is “bringing stablecoin issuance into the core of U.S. financial infrastructure.”
USAT launched with a market cap of $20 million, a rounding error compared to the over $186 billion in circulating USDT, Tether’s primary stablecoin. However, USAT’s market cap will almost certainly grow given the number of digital asset exchanges that have already announced plans to list USAT. Naturally, this includes Tether’s sister company Bitfinex, but also Bybit, Crypto.com, Kraken, OKX, and fintech platform Moonpay.
Wall Street financial services firm Cantor Fitzgerald (NASDAQ: ZCFITX) will custody the fiat reserves backing USAT and serve as USAT’s “preferred primary dealer.” Cantor claims to perform the same custodial service for the over $100 billion in U.S. Treasury bills allegedly backing USDT and also owns a ‘convertible bond’ with Tether, believed to represent 5% of the company.
USAT will be pitched as a settlement mechanism for U.S. institutions, with Tether promising that “banking partners are being lined up to support broad access to USAT across the American financial ecosystem.” Given Tether’s Wall Street connections, Cantor founder Howard Lutnick’s current role as U.S. Commerce Secretary, and the fact that USAT is ostensibly run by former White House crypto advisor Bo Hines, institutions might be willing to give USAT’s tires a kick.
USAT will presumably be pitched for use in U.S.-approved decentralized finance (DeFi) applications, assuming Congress can pull its thumb out and approve the necessary digital asset market structure legislation. DeFi stablecoin use is currently dominated by USDC, the dollar-backed token issued by Tether’s closest rival Circle.
There’s little love lost between Tether and Circle. Last October, Tether CEO Paolo Ardoino made a veiled reference to Circle by claiming USAT would “hit the ground running and start taking away market share from our competitors that were the ones that tried to kill us in the first place.”
If Circle investors were rattled by USAT’s launch, they didn’t show it, as Circle’s share price closed Tuesday down a mere 1.3%.
Will Tether’s colorful history impact USAT adoption?
USAT was supposed to debut in December, and Tether’s announcement offered no explanation for the delay. But it’s safe to say that Tether—which has traditionally retreated from jurisdictions where regulatory demands are high—was putting extra emphasis on ensuring USAT’s papers were in order.
Tether has laid out a strategy in which USAT gets to play in the regulated U.S. market, leaving USDT to continue its role as the dominant stablecoin in emerging markets. But USDT also has an unfortunate reputation as the criminal world’s preferred means of moving money.
As if on cue, a Chinese national was sentenced to 46 months in U.S. prison on Tuesday for laundering nearly $37 million in funds stolen from American citizens via ‘pig butchering’ scams. The stolen funds were transferred from U.S. bank accounts to an account at Deltec Bank, a Bahamas-based bank where Tether’s former banker, John Ray, once worked. Deltec was directed to convert the cash to USDT, which was then transferred to Cambodia-based scam centers.
USDT is also a proven means of evading U.S. economic sanctions. Last week, researchers at the Elliptic blockchain analytics firm reported that Iran’s central bank has acquired “at least $507 million” in USDT over the past year. Iran reportedly began accelerating its USDT buying to shore up the value of the local rial currency and to bypass sanctions that prevent it from using U.S. financial rails for international trade.
The 2026 Crypto Crime Report by TRM Labs found that Iran’s Revolutionary Guard Corps used two bogus exchanges for sanctions evasion, moving $1 billion over the past two years “almost entirely in USDT on the TRON blockchain.” It’s unclear whether U.S. authorities have asked Tether to freeze any of this Iranian central bank-linked USDT.
Stablecoin use grows, but utility still lags
Last December, the U.K.’s Financial Conduct Authority (FCA) released data showing the bulk of stablecoin transactions weren’t payments for goods and services. Despite all the headlines about remittances and cross-border payments, stablecoins’ dominant use case continues to be serving as one-half of a trading pair for other digital assets.
On January 23, McKinsey analysts posted a LinkedIn report titled Stablecoins in payments: What the raw transaction numbers miss. They start by noting Artemis Analytics data showing annual stablecoin transaction volume hitting $35 trillion, then caution that “most of this activity doesn’t represent true end-user payments, such as paying suppliers or sending remittances. It consists mainly of trading, internal shuffling of funds, and automated blockchain activity.”
McKinsey’s analysis is that actual stablecoin payment volume is ~$390 billion per year, “roughly 0.02%” of the global total. The analysts stress that this sharply lower figure “doesn’t diminish stablecoins’ long-term potential as a payment rail. Instead, it establishes a clearer baseline for assessing where the market stands and what will be required for stablecoins to scale.”
Of this $390 billion, “about $90 billion” represents global payroll and remittances, which is less than 1% of the over $100 trillion in volume this segment records annually. B2B payments account for $226 billion, a mere 0.01% of the $1.6 quadrillion in global B2B volume.
Another $8 billion goes to settlement transactions (asset managers paying dividends to investors, reinvesting dividends into funds, etc.), also about 0.01% of the global settlement volume of $200 trillion.
McKinsey stresses that, while the $390 billion used for non-trading purposes last year is a tiny fraction of total stablecoin volume, that figure is still double what it was in 2024. Year-on-year growth is even more dramatic in terms of B2B payments (+733%) and card-linked spending (+673%), with smaller but still impressive growth in B2C payouts (+86%) and P2P payments (+42%).
Asia accounts for 60% of cross-border stablecoin payments, totaling $245 billion, with most of this volume coming from Singapore, Hong Kong, and Japan. North America ranked second ($95 billion) while Europe ($50 billion) was a distant third. Latin America and Africa each accounted for less than $1 billion.
The analysts note that stablecoins “are gaining traction where they offer clear advantages over existing payment rails, such as faster settlement, improved liquidity management, or reduced friction in user experience.”
McKinsey warns financial institutions to “apply a critical lens to reported volumes” in order to “invest appropriately, shape emerging use cases, and capture value as adoption matures.”Stablecoin rails assisting international aid efforts
Last week’s World Economic Forum (WEF) summit in Davos featured a stablecoin-focused panel in which former World Bank economist Vera Songwe noted that “remittances are more important to Africa than aid.” Songwe said remittance volumes “have tripled” over the past three years “compared to overall development assistance.”
However, remitting to Africa via traditional payment rails can cost users up to 6% in fees (the World Bank says this can hit nearly 9% in sub-Saharan Africa). Also, around 650 million Africans lack access to bank accounts, but smartphones are prevalent, and “with a smartphone you have access to a stablecoin.”
Songwe said stablecoin adoption was highest in countries with higher capital controls, citing Egypt, Nigeria, and Ethiopia as the continent’s biggest stablecoin users. Stablecoins are also allowing users to preserve the value of their funds by avoiding the wild fluctuations that plague many local fiat currencies.
Remittances may be more important than aid, but an interesting case study for stablecoin-based aid distribution was recently highlighted in the New York Times. The report focused on HesabPay, an app developed by an Afghan-American entrepreneur who ran Afghanistan’s leading payroll processor before America’s withdrawal from the country in 2021 and the Taliban’s return to power.
HesabPay uses its own stablecoin (HAFN), pegged to Afghanistan’s Afghani (AFN) currency and issued on the Algorand blockchain. HesabPay says over 650,000 digital wallets are operational in Afghanistan, of which roughly 50,000 are most active, processing ~$60 million in HAFN each month.
HesabPay transactions don’t require bank access, allowing international funds to flow directly to local aid groups. The platform also performs real-time cross-checks on wallet activity to ensure compliance with international databases of financial scammers, money launderers, and terrorists.
Mercy Corps, a non-governmental organization focused on delivering humanitarian assistance to countries plagued by instability, partnered with HesabPay and the Community Driven Development Organization (CDDO) on a pilot project in Afghanistan last year. The project aimed to transfer $100 in HAFN per month to 100 rural households in Gardez, southeastern Afghanistan.
Mercy Corps claimed a 29% reduction in overall delivery costs and a 10-hour improvement in payment delivery time vs. traditional informal money transfer agents. The pilot allowed Mercy Corps to deliver “more aid per dollar in a safer and faster way, directly to participants’ physical [AfPay] cards” for use at local merchants. The recipients of this aid appeared to agree, with 98% stating a preference for receiving future payments in HAFN rather than cash.
Mercy Corps has since expanded the pilot to Syria (where HesabPay relies on dollar-denominated tokens) and is developing similar trials in Sudan and Haiti. HesabPay has the support of the United Nations High Commissioner for Refugees but groups like Mercy Corps are under financial pressure after the U.S. government slashed funding for international aid programs.
Scott Onder, Mercy Corps’ chief investment officer, told the Times that the traceability of blockchain-based transactions could offer “a way to win back trust from those who have come to doubt the usefulness of aid.”
Let’s make a deal
Chicago-based stablecoin infrastructure provider ZeroHash is reportedly looking to raise $250 million at a valuation of $1.5 billion, according to a CoinDesk report. That valuation would represent a 50% rise over the $1 billion value applied to the company following last September’s $104 million raise in a round led by Interactive Brokers (NASDAW: IBKR), a ZeroHash client).
ZeroHash declined to comment on the report, which came following the recent news that the company had ended its discussions with Mastercard (NASDAQ: MA) over a possible $2 billion acquisition. While ZeroHash opted to remain independent, Mastercard was reported to still be mulling a strategic investment in the company.
Independence is for the birds, according to ‘intelligent finance’ firm Brex, which has just been acquired by Capital One (NASDAQ: COF) in a $5.15 billion deal. While hefty, Brex’s sale price is a bit of a comedown from the $12.3 billion valuation the company enjoyed via its 2022 Series D-2 funding round.
Brex announced plans to integrate native stablecoin payments into its offering last September, starting with Circle’s USDC. The shift enables merchants to accept stablecoin payments with automatic conversion to USD via their Brex business account and to send stablecoins from their USD balances, while Brex customers can pay their card balances with stablecoins.
Brex founder/CEO Pedro Franceschi said the deal would allow the companies to “maximize founder mode by combining Brex’s payments expertise and spend management software with Capital One’s massive scale, sophisticated underwriting, and compelling brand” to expand financial options for businesses.
Another stablecoin deal came earlier this month when crypto infrastructure firm Bakkt Holdings (NASDAQ: BKKT) announced it had reached a deal to acquire stablecoin payment firm Distributed Technologies Research (DTR).
The companies inked a deal last spring to incorporate DTR’s ION Network into Bakkt’s broader architecture, naming DTR founder Akshay Naheta as Bakkt’s co-CEO alongside original CEO Andy Main. Naheta will now serve as the sole CEO of the combined entities that will operate under the new banner of Bakkt Inc.
The acquisition, which requires shareholder approval, will see Bakkt issue around 9.13 million shares of its Class A common stock to DTR shareholders. Bakkt says DTR’s technology will help “accelerate Bakkt’s time-to-market for stablecoin settlement, reduce third-party dependency, and support future revenue generation across payments and banking use cases.”
Bakkt was founded in 2018 by Intercontinental Exchange (ICE), parent company of the New York Stock Exchange. ICE still holds a majority stake in Bakkt, but the latter’s focus has shifted over the years as it struggled to turn a profit.
Originally aiming to be a bridge between the crypto and tradfi worlds, Bakkt offered custody services and loyalty rewards before repositioning itself last spring as a “pure play crypto infrastructure company.” The pivot followed Bakkt losing two major clients, including financial services firm WeBull (NASDAQ: BULL), which at the time represented 74% of Bakkt’s crypto services revenue. Bakkt’s Q325 report showed revenue up 27% year-on-year to $402 million, but the company still booked a $25.3 million loss.
In late 2024, Bakkt was itself reported to be an acquisition target of President Trump’s Trump Media & Technology Group (TMTG) (NASDAQ: DJT), although nothing concrete came of these reports.
Watch | Cut Costs & Streamline Payments: The Case for Stablecoins
Recommended for you
