JPMorgan Warns U.S. Stablecoin Market Could Become Zero-Sum

The upcoming wave of U.S. stablecoin launches may merely shuffle market share rather than expand the sector, JPMorgan analysts said.

The $270 billion stablecoin market has grown steadily but still represents less than 8% of crypto’s total market capitalization—a level it has maintained since 2020, according to a research note led by Nikolaos Panigirtzoglou. Unless the broader cryptocurrency market grows significantly, the bank warned, new U.S. stablecoins could turn into a zero-sum contest.

Tether, whose USDT is primarily used overseas, plans to launch a U.S.-compliant token called USAT. Unlike USDT, whose reserves are roughly 80% compliant with U.S. requirements, USAT would fully adhere to the new regulatory standards.

Stablecoins—cryptocurrencies pegged to assets such as the U.S. dollar or gold—play a critical role in crypto markets, offering payment infrastructure and facilitating cross-border transfers. Tether’s USDT remains the largest stablecoin by market share, followed by Circle’s USDC.

The passage of U.S. stablecoin legislation in July has triggered a fresh round of launches targeting Circle’s USDC, which dominates the domestic market. While newcomers vie for position ahead of regulatory implementation, overall growth of the stablecoin sector remains linked to the broader crypto market, JPMorgan noted.

Circle is facing increasing competition from platforms like Hyperliquid—whose exchange accounts for nearly 7.5% of USDC usage—and from fintech players including PayPal, Robinhood, and Revolut, all rolling out their own tokens. In response, Circle is developing Arc, a blockchain designed for USDC transactions, aiming to enhance speed, security, and interoperability while maintaining USDC’s central role in crypto infrastructure.

Without significant market expansion, JPMorgan concluded, the surge of new U.S. stablecoins may simply redistribute market share rather than grow the overall sector. Notably, USDC supply has surged to $72.5 billion, 25% ahead of Bernstein’s 2025 projections, according to a recent report.