Tether Already Won; Banks and Fintechs Are Just Catching Up

Never underestimate someone attending the White House and calmly gazing at zebras at the Natural History Museum in New York at the same time

Mar 10, 2025

A recent Financial Times article describes the growing push by banks and fintechs to launch their own stablecoins, calling it a "gold rush." Institutions like Bank of America, PayPal, Stripe, and Standard Chartered are all trying to break into a market that has already been defined by Tether. They see the trillions of dollars moving through USDT and have realized that stablecoins are (already) the future of global finance. But here’s the reality: they’re already too late.

For years, TradFi dismissed stablecoins as a gimmick, something for crypto traders to use between trades. Now, they’re having to wake up to the fact that stablecoins are a non-negotiable presence in payments, remittances, and cross-border transactions, particularly in emerging markets. And who owns that market? Tether.

Banks and fintechs are not rushing to innovate; they’re FOMO-ing into not being behind. But they might need to realize that Tether is already too big, too entrenched, and too dominant for them to catch up. Their network effect simply reaches much wider than merely the stablecoin market.

Tether Created the Market; Now Everyone Else is Copying

For all the hype around TradFi launching stablecoins, let’s look at the numbers:

Tether processes over $131 billion in transactions per month
PayPal’s PYUSD? $163 million. That’s 1/800th the volume of Tether
Stablecoin transaction volume reached $710 billion last month, with USDT and another less significant stablecoin making up nearly 90% of that
Tether’s total supply? $142 billion. The next biggest competitor USDC has just $57 billion

Tether built the playbook that TradFi is now following. Banks and fintechs concept of innovation is “accepting reality” and having a traction panic attack. They lack the agility and experience that Tether has built over the years. Their legal team alone will cause endless blockers.

Tether was there before regulation, before acceptance, before adoption; it thrived despite skepticism. To this day, competitors pay sers to spread FUD. And now? Tether is too deeply ingrained for banks to displace.

TradFi Stablecoins Will Struggle Where Tether Thrives

The real power of stablecoins isn’t in the U.S. or Europe; it’s in emerging markets.

Latin America, Africa, Southeast Asia, and the Middle East rely on stablecoins to escape failing banking systems, access USD liquidity, and move money without friction
SpaceX uses stablecoins to repatriate funds from Argentina and Nigeria
Companies like ScaleAI pay international contractors in stablecoins because traditional banking is too slow and expensive
USDT is the de facto stablecoin in emerging markets; where local currencies fluctuate wildly and traditional banking simply doesn’t work

Meanwhile, banks and fintechs launching stablecoins face major obstacles. TradFi stablecoins will be over-regulated into irrelevance. Governments will micromanage their reserves, redemptions, and compliance. Tether already operates in 100+ jurisdictions, adapting quickly to changing rules. Additionally banks and fintechs take years to make decisions. By the time they move, Tether has already dominated another region. The people who need stablecoins the most aren’t waiting for permission from banks; they already use Tether. Becasue they can…..

For TradFi stablecoins to beat Tether, they would need to replace USDT in global trade, remittances, and commerce. That’s not happening. Tether is too embedded in the system.

The Myth of “Safe” TradFi Stablecoins

One of the biggest narratives being pushed is that TradFi stablecoins will be safer than Tether because they’re issued by banks or regulated fintechs. But let’s take a good look at the semantics of “Safe”:

Stablecoins are not cash; they are only as strong as their reserves
Tether’s reserves are already public and include over $80 billion in U.S. Treasuries; the safest asset on earth
PayPal’s PYUSD has far smaller reserves and lower liquidity
Banks aren’t more transparent than Tether. They just have the government backing them

The real risk isn’t Tether’s reservesit’s whether banks can make their stablecoins relevant. Tether already has liquidity, trust, and integration across the entire crypto ecosystem. Banks are starting from zero in search of “greater fools”….

The Collapse of TradFi Stablecoins Before They Ever Existed

Here’s the hard truth: the market won’t support nor need dozens of stablecoins.

The network effect matters; Tether has it, TradFi stablecoins don’t
Liquidity is king, and USDT has deep liquidity across every major exchange, blockchain, and OTC desk. (and football club, and LatAm energy conglomerate and so forth)
Banks will over-regulate their own stablecoins into irrelevance
Trust and market adoption can’t be bought overnight

The stablecoin market will consolidate, and Tether is already in pole position. Even if some bank-backed stablecoins survive, they won’t dethrone Tether. TradFi doesn’t want to compete with Tether. They want to control the market.

They’re not building better stablecoins; they’re trying to push regulation to make it harder for Tether to operate
They know they can’t win on merit, so they’ll lobby for rules that give them an artificial advantage
If they could, they would ban Tether outright; but they can’t, because it’s already too deeply entrenched in global finance

Banks and fintechs have finally realized what crypto already knew years ago: stablecoins are the future. Tether is big, fast, and more widely adopted than any of these new TradFi stablecoins will ever be. It’s deeply integrated into global finance, embedded in emerging markets, and liquid across every major exchange + deeply embedded into the current US administration.

TradFi is not coming for Tether; they’re coming to beg for relevance in a game Tether already won. They’re coming for the scraps

I love stablecoins, Tether in particular, and I will be writing about the ongoing and ever-increasing future stablecoin war. Stay tuned for insights, drama, and analysis as it all unfolds.

P.S. In case you didn’t realize, I am not Patrick Hansen