USDT sees fastest market cap decline since 2022 as stablecoin supply falls in February

In February, stablecoin supply stalled, while USDT burned 1.7% of outstanding tokens. This is the fastest rate of liquidity slowdown since the 2022 bear market. 

Stablecoin supply stalled in the past few months, and even Tether saw significant outflows from USDT. The supply of USDT fell by 1.7% in February to date, which is the steepest decline since the 2022 collapse of the FTX exchange and the subsequent bear market.

While USDT sits at a high baseline supply of 185.3B tokens, recent weeks have shown that the market can make moves without triggering fresh minting events. Since the start of 2026, Tether has retired over $4B in USDT tokens, not issuing new mints even as BTC lost its positions. 

Stablecoin usage remained near an all-time peak, mostly used for centralized and decentralized trading. However, the availability of liquid tokens did not translate into directional market movements. Tokens have been limited as payment tools or accumulated in DeFi vaults, but have not immediately helped the spot or derivative markets. 

USDT shrinks after decreasing usage in the Euro area

The supply of USDT is reflecting the application of MiCAR regulations in the Euro area. Local platforms switched to Circle’s USDC and EURC, cutting a significant part of Tether’s traffic.

The influence of USDT on Europe has been falling since the end of 2024, adding to the overall stagnation.

The Euro area carried around 33.34% of stablecoin volumes, down from over 79% at one point in 2023. According to Artemis data, Europe was among the top stablecoin users right before the introduction of MiCAR. Currently, activity is shifting to the USA, following the introduction of the Genius Act. 

Despite this, the rest of the world compensates for the loss with near-peak usage for USDT on Ethereum and TRON. The supply on TRON offset the general decline with more active minting, but the token’s effect may be limited to the TRON ecosystem and P2P payments. 

Stablecoins face a decision on sharing interest rates

Stablecoins are facing a watershed moment, expecting a decision on distributing their interest rate. If successful, stablecoins may attract more liquidity to crypto platforms, with an effect on DeFi. 

Regulators have remained skeptical of stablecoins, warning about the creation of private money. Stablecoin issuers have a varied approach, and not all have the same potential to produce passive income. 

In the case of USDT, Tether has decided not to share its revenues from US T-Bills with end users. Other stablecoins are more aggressive about offering interest rates based on blockchain lending. 

For now, the decision is leaning toward banks, which lobbied against allowing stablecoin yield.