Key Takeaways
The new USDC Gateway, a unified pool for cross-chain efficiency, may still struggle to attract USDT users. Here’s why Coinbase predicts an adoption challenge for USDC.
Circle’s remarkable USDC Gateway, which promises seamless and faster settlement across several chains, may still fail to dent Tether’s USDT dominance, according to Coinbase analysts.
Gateway Wallet removes bridges that can be painful for users moving funds across chains due to delays.
In addition, since USDC pays interest across select exchanges for holders, this could encourage adoption, per to a report by Coinbase analysts David Duong and Colin Basco.
“We think the dollar savings could be considerable for exchanges, providing a strong economic incentive for adoption: every $1B of previously stranded float (assuming ~4% short-term rates) could recover $40M/yr.”
USDT vs. USDC
Still, the analysts added that the update may fail to force USDT holders to switch to USDC. They stated,
“In our view, Gateway will likely nudge new DeFi apps and greenfield exchanges to make USDC their base currency—but getting incumbents to flip from USDT could still be difficult.”
As such, Gateway’s unified pool will be excellent for DEXes and payment rails that seek near instant settlement. However, some of the largest crypto centralized exchanges are quoted based on USDT pairs.
“By contrast, large existing venues tend to benefit from ingrained network effects. The deepest spot books and derivatives collateral are still USDT-quoted/margined.”
Besides, these dominant crypto venues could increase switching costs to USDC, further straining the adoption of the Gateway, noted Duong and Basco.
Tether, Circle race for post-GENIUS Act moat
Stablecoin gained massive traction in 2025, including a legal framework, allowing U.S. issuers to operate with clear rules after the passage of the GENIUS Act.
According to the Messari report, the stablecoin userbase has surge to over 400 million users, including companies with the most individual users in emerging markets like Nigeria.
As the cheapest and fastest USD and cross-border payment rails, stablecoins have grown to nearly $280B and could explode to $2 trillion by 2030, according to the U.S. Treasury.
But adoption will be messy as issuers and key players plan to have their own standalone L1 chains, according to stablecoin watchers.
Notably, Stripe announced an L1 called Tempo, while Circle unveiled Arc.
On the other hand, Tether has reportedly funded two USDT-focused L1s, Stable and Plasma, to enhance network effects. It has also hired a former White House executive to drive its U.S. expansion.
According to Paxos’ stablecoin expert, Chuk Okpalugo, issuers who win mass distribution will emerge at the top.
“The market will decide the winners, but those with strong existing distribution start with a major advantage.”
Source: X
That said, the USDC market size expanded about 4% to $66B in the past month, while USDT grew only 2% to $166B.
But the major expansion was recorded amongst yield-bearing stablecoins like Ethena’s USDe in Q3.