USDC may be smaller than Tether in terms of size, but it packs a big punch.
The global stablecoin market grew by 50% in 2025, but two stablecoin giants continue to dominate the industry: Tether (USDT +0.01%) and USDC (USDC +0.01%). According to the latest Motley Fool stablecoin research, they account for a whopping 90% of the total value of all stablecoins.
That leads to an obvious question for crypto investors: Which stablecoin — Tether or USDC — is the better buy right now?
How to evaluate stablecoin investments
To answer that question, it’s helpful to keep in mind that these two stablecoins are not traditional investments. They are digital currencies pegged 1:1 to the U.S. dollar, and as a result, are often referred to as “digital dollars.” At any point in time, investors can swap between physical and digital dollars, making it easy to move money into and out of the crypto market.
The dollar peg has very important implications. One year from now, the price of both Tether and USDC will be exactly $1. Five years from now, the price of both will be exactly $1. And 10 years from now, the price of both will be exactly $1.
You can easily see this in this five-year chart for USDC. While there is some amount of “wiggle” around the $1 mark, the long-term average price is $1.
However, if you simply buy and hold stablecoins without putting them to work in the blockchain world, you won’t make any money on your investment. It’s a bit like taking physical dollars and hiding them under your bed.
The utility case
That’s why choosing the “best” stablecoin should be based on utility. In other words, what can you actually do with stablecoins?
The core use case for stablecoins is earning passive income. Just as you can earn a modest annual yield by holding your physical dollars in a bank, you can also earn a modest annual yield by holding your digital dollars on the blockchain. On some cryptocurrency trading platforms, you can earn anywhere from 3.5% to 5.25% per year on your stablecoin investment.
Stablecoin investors can earn an even higher yield via decentralized finance (DeFi), such as by getting involved with DeFi lending protocols or yield farming. Here, yields can be as high as 15% — but you’re also taking on much more risk.
Stablecoins can also be used on a growing number of online platforms to make purchases. At the point of checkout, you can simply scroll through the payment options until you see an option to pay by stablecoin. The Shopify e-commerce platform, for example, recently embraced USDC for online purchases via a new partnership with Coinbase Global.
Admittedly, the use cases for Tether and USDC are largely the same. It’s really just a matter of where you shop, spend money, and invest in crypto. For example, I’ve always been partial to USDC because it’s the stablecoin backed by Coinbase.
Regulatory and compliance issues
However, USDC has a clear edge over Tether when it comes to regulatory oversight. That’s because USDC is backed by Circle Internet Group, a publicly traded U.S. corporation. In contrast, the Tether stablecoin is backed by Tether Limited, a company currently domiciled in El Salvador (and before that, the British Virgin Islands and Hong Kong).
Now that the new Genius Act for stablecoins has passed in the U.S., regulatory compliance is vitally important. For that reason, large financial institutions and major corporations within the U.S. will likely continue to favor USDC over Tether. Simply stated, Tether is not subject to the same level of regulatory scrutiny as USDC, and that makes it slightly more risky.
In search of the perfect stablecoin
Admittedly, Tether is still twice as big as USDC in terms of market cap, and is easily the favorite stablecoin of the non-U.S. world. If the goal is simply to swap into and out of different cryptocurrencies, I can see the value of Tether. There’s greater liquidity, and hence, much less “wiggle” around the dollar peg. For active, short-term traders, Tether is likely the better buy.
However, there is really no such thing as a perfect stablecoin. That helps to explain why so many different corporations and financial institutions are trying to launch their own stablecoins. There’s some core user need that they are trying to address. If you’re an active PayPal user, for example, you might want to consider the new PayPal stablecoin, which now has a $3.6 billion market cap.
But dollar for dollar, I think USDC is the best stablecoin to buy right now. It’s readily available to buy and sell, there are plenty of opportunities to earn yield, and it’s becoming more common as a payment option at checkout. If you’re looking to move physical dollars into digital dollars, it could be worth taking a closer look at USDC.
