Tether loses nearly $5 billion across crypto exchanges as USDC and RLUSD rivals pay to win liquidity

Tether lost $4.6 billion in USDT supply across 19 selected cryptocurrency exchanges and lenders during the third quarter as rival stablecoins gained ground.

During the same period, the 19 institutions added approximately $1.9 billion in competing tokens, including $569 million of Circle's USDC and $493 million of Ripple's RLUSD.

According to the Crystal Intelligence report, Bybit recorded the largest reduction, shedding $1.66 billion in USDT while adding $315 million of RLUSD. Binance reduced its Tether holdings by $987 million and acquired $223 million of USDC, while OKX cut $899 million in USDT and added $273 million of USDC.

Across the wider market, USDT's circulating supply fell $647 million, or 0.4%, to about $184 billion during the quarter. Meanwhile, RLUSD rose 59% to $2.5 billion, while USDC gained $687 million.

The changes reflect growing competition for cryptocurrency trading balances, as issuers and their distribution partners offer financial incentives to exchanges and customers who hold their tokens.

The competition has become especially visible in cryptocurrency derivatives markets, where stablecoins serve as trading collateral and can generate additional income for platforms that hold customer deposits.

Hyperliquid, a leading derivative trading platform, recorded a $1.5 billion increase in USDC deposits during the quarter, bringing its holdings to approximately $7.2 billion.

The growth coincided with an arrangement between Coinbase and Circle that lets Hyperliquid receive income from USDC deployed on the platform.

Under Hyperliquid's Aligned Quote Assets framework, Coinbase serves as USDC's treasury deployer, while Circle manages the technical infrastructure. Coinbase shares most of the reserve-linked income with Hyperliquid, with the arrangement specifying payments based on a cost-adjusted reference rate.

That provides Hyperliquid with revenue tied to the collateral supporting its derivatives business. Crystal found that approximately three-quarters of the platform's quarterly USDC increase came from one cluster of linked wallets.

Deribit, the largest derivatives trading exchange, has adopted a different strategy, rewarding customers directly for maintaining USDC balances. The Coinbase-owned platform added $365 million in USDC during the quarter and expanded its rewards program to approximately 70 additional countries in August.

Under the program, qualifying customers receive monthly payments calculated using their daily minimum USDC holdings.

Other issuers are pursuing similar arrangements. Bybit's RLUSD holdings increased following a rewards campaign launched with Ripple in July, while Bitget and MEXC accumulated USDGO through holding incentives and conversion promotions.

The competition extends into decentralized lending. Spark placed about $247 million in RLUSD into a Morpho vault run by Sentora, accounting for most of Morpho's $404 million quarterly increase across six stablecoins.

These commercial agreements are becoming increasingly expensive for issuers seeking access to exchanges, lending platforms and their customers.

Circle's own financial results illustrate the rising cost of competing for stablecoin distribution. The company generated about $1.4 billion in revenue in the first half of 2026 but spent $819 million, or 59% of that amount, on distribution and transaction costs.

Another $473 million went to operating expenses and network investment, leaving Circle with about $103 million in net profit, or just seven cents of every revenue dollar.