In the restructuring of the cryptocurrency lending market, Tether leads the way... Market share surpasses 70%

Tether, which issues the stablecoin USDT, has emerged as a key player in the cryptocurrency lending market. Since 2022, major lenders like BlockFi, Celsius, and Genesis have collapsed due to market collapse and risk management failures, and Tether has quickly filled their voids to gain dominance in the lending market.

According to a recent report by Galaxy Digital, as of the fourth quarter of 2024, Tether, along with Galaxy Digital and Ledn, accounts for 89% of the centralized finance (CeFi) lending market, with Tether accounting for about 70% of this. Compared to a share of around 20% in the second quarter of 2021, this represents an increase of more than three times.

Alex Sun, head of Galaxy Digital Research, evaluated that “Tether is a clear major player that has supplied liquidity when the market was shaken.” Tether has moved beyond simply issuing stablecoins to also engaging in large-scale lending business, establishing itself at the center of the cryptocurrency lending market.

However, Tether's expansion into the lending business has also raised some concerns in the market. Tether claims that USDT is fully collateralized by assets, but since the collateral includes its own loans and other investments, questions about its repayment capacity have been consistently raised, especially with high market volatility. In response, Tether explained, “All loans are over-collateralized with Bitcoin, and we operate conservatively relative to our equity.” They further emphasized, “There has not been a single repayment failure to date.”

Tether is recognized as one of the most profitable companies within the cryptocurrency industry, recording a net profit of $13 billion for the year 2024. Its headquarters are currently in El Salvador, and after completing its first capital provision for oil trading in the Middle East, it is also preparing a large-scale dollar lending program secured by Bitcoin together with Cantor Fitzgerald.

Meanwhile, the overall centralized lending market is on a decline. As of the fourth quarter of 2024, the CeFi loan balance is $11.2 billion, down about 68% compared to the all-time high. On the other hand, the DeFi (Decentralized Finance) ecosystem is gradually expanding its share through the expansion of CDP (Collateralized Debt Position) based stablecoins. The total cryptocurrency lending market size for the same quarter is $36.5 billion, a 43% decrease from the peak of $64.4 billion in the fourth quarter of 2021.

As the market structure changes rapidly, Tether is emerging as a pivotal force in the cryptocurrency lending market, beyond just being an issuer.