Tether’s USDT supply contracted by $4.6 billion across 19 major cryptocurrency exchanges and lenders during the third quarter of 2026, marking a significant shift in stablecoin market dynamics as rival assets USDC and RLUSD captured $1.9 billion in combined inflows through incentive programs and revenue-sharing arrangements.
The erosion was concentrated among the largest venues. Bybit led the exodus, reducing USDT holdings by $1.66 billion while adding $315 million in RLUSD. Binance cut USDT by $987 million and acquired $223 million in USDC. OKX trimmed USDT by $899 million and added $273 million in USDC. These three exchanges accounted for the majority of the quarter’s USDT outflow.
USDT’s overall circulating supply fell $647 million during Q3, reaching $184 billion by quarter-end, representing a 0.4% decline. In contrast, USDC gained $687 million in circulating supply, while RLUSD surged 59% to reach $2.5 billion in total supply.
Incentive Programs Drive Rival Adoption
Bybit and Ripple launched an RLUSD rewards campaign in July 2026, directly targeting USDT holders. The program coincided with Bybit’s sharp reduction in USDT inventory. Deribit expanded its rewards program to approximately 70 additional countries in August, adding $365 million in USDC holdings during the quarter. Hyperliquid accumulated $1.5 billion in USDC deposits, bringing its total USDC holdings to $7.2 billion.
PayPal-backed PYUSD offered a 4.5% incentive rate on deposits capped at $1 billion. Spark deployed $247 million in RLUSD into Morpho, a decentralized lending protocol that saw a $404 million quarterly increase across six stablecoins. Stripe-owned Bridge launched Open USD in September 2026, adding a fourth major competitor to the stablecoin landscape.
Circle’s Profitability and Coinbase’s Holdings
Circle generated $1.4 billion in revenue during the first half of 2026, with distribution and transaction costs accounting for $819 million (59% of revenue). Operating expenses and network investment totaled $473 million, leaving $103 million in net profit, or 7 cents per revenue dollar.
Coinbase’s average USDC holdings reached a record $20 billion in Q2 2026, up 44% year-over-year. Binance invested $100 million in Circle during the period, signaling institutional confidence in USDC’s expansion strategy.
Payment Volume and Exchange Holdings
Stablecoins processed $482 billion in classified payments from January through September 2026, up 45% year-over-year, with transaction counts rising 71% to 1.04 billion. USDT accounted for $405 billion (84%) of that payment value, while competing stablecoins handled $77 billion (16%). September marked the highest monthly payment total at $72 billion.
Exchange holdings of tracked stablecoins totaled $85 billion at the end of September, with USDT commanding 66% of that total. Binance alone held $41 billion in USDT. The average stablecoin payment size declined from $544 in the prior year to $462 in the current period, suggesting a shift toward smaller, more frequent transactions. Tron blockchain accounted for 66% of classified payment value.
