Circle’s USDC and Tether’s USDT are the two largest stablecoins in the world, with a combined market capitalization of over $210 billion. However, the two tokens vary significantly in size, with USDT making up approximately $150 billion of that total. From this dominant position, Tether has been able to grow to achieve truly incredible profits, reporting that it earned $13 billion in 2024. This is compared to a mere $156 million for Circle. A portion of this difference comes down to the differences in reserves for the tokens. Read more: Why is Tether 213% bigger than Circle but 8,000% more profitable? For example, Circle maintains far more cash available than Tether — approximately $5.8 billion compared to Tether’s $64 million. This suggests that Tether has access to credit to manage redemptions. Tether is also willing to include certain types of investment in its reserves that Circle avoids, including: Secured loans Corporate bonds Bitcoin Non-US treasury bonds Precious metals Other investments This aggressiveness helps increase Tether’s potential profits from its reserves, whereas Circle has taken a more conservative tack. Both firms rely substantially on US treasuries and overnight reverse repurchase agreements in their reserves. However, Circle keeps a larger portion of its reserves in these assets than Tether does. How to best regulate stablecoins has once again become an important political issue as the Senate debates the GENIUS Act and the House debates the STABLE Act.