Stablecoin supply slows down, USDT reports largest decline since 2022

Stablecoin supply stabilized in February, with Tether withdrawing 1,7% of circulating USDT – the sharpest contraction since the FTX collapse and the subsequent bear market in 2022.

USDT’s market capitalization remains high – around 185 3 billion tokens – but since the start of 2026, the company has withdrawn over 4 billion dollars in USDT without issuing new tokens, even amid Bitcoin price volatility.

Liquidity holds steady but does not drive the market

Stablecoin usage remains near historical highs, primarily for centralized and decentralized trading. However, the available liquidity has not translated into a distinct market movement.

A portion of the tokens is being used as a payment tool or accumulated in DeFi protocols without generating significant momentum in spot or derivative markets.

Europe restricts usage following MiCAR

The contraction of USDT coincides with the implementation of the MiCAR regulation in the Eurozone. Local platforms have gradually transitioned to Circle’s USDC and EURC, leading to a decline in Tether traffic in the region.

The Eurozone’s share of stablecoin volumes has decreased to approximately 33,3%, down from over 79% in 2023. Europe was among the leading users of stablecoins immediately before the introduction of MiCAR, but activity is gradually shifting toward the US, especially following the introduction of legislative frameworks such as the Genius Act.

While the total supply of USDT is decreasing, the TRON network is seeing more active issuance, partially offsetting the contraction. However, the effect appears limited primarily to the TRON ecosystem and peer-to-peer payments.

The yield debate

The stablecoin sector is at a turning point as regulators and banks discuss whether issuers can share the yield from their reserves with end-users.

For now, Tether does not distribute yield from US Treasury bills to USDT holders. Other projects, however, are experimenting with models to provide yield through blockchain lending.
The banking sector is actively lobbying against the possibility of stablecoins offering interest, citing the risk of creating “private money.”

A market in waiting

The fastest contraction of USDT since 2022 highlights a liquidity slowdown in the crypto ecosystem. Although volumes remains high, the market appears to be in a wait-and-see mode while regulatory decisions and the interest rate environment shape the next stage of the cycle.