Tether loses $4.6 billion in exchange USDT balances

USDT balances at 19 cryptocurrency exchanges and lending platforms fell by $4.6 billion in the third quarter, while competing stablecoins gained about $1.9 billion. The increase included $569 million in Circle’s USDC and $493 million in Ripple’s RLUSD, as issuers and their partners offered incentives for exchange liquidity.

Bybit recorded the largest decline in USDT, cutting its balance by $1.66 billion while adding $315 million of RLUSD. Binance reduced its USDT balance by $987 million and increased USDC by $223 million. OKX cut USDT by $899 million and added $273 million of USDC.

Across the broader market, USDT’s circulating supply fell by $647 million, or 0.4%, to about $184 billion during the quarter. RLUSD’s supply rose 59% to $2.5 billion, while USDC increased by $687 million.

The competition centered on derivatives markets, where exchanges use stablecoins as collateral and can earn income from assets held on their platforms. Hyperliquid increased its USDC deposits by $1.5 billion during the quarter, bringing its total to about $7.2 billion. About three-quarters of the increase came from a group of linked wallets.

Hyperliquid uses a structure in which Coinbase deploys USDC reserves and Circle provides the technical infrastructure. Coinbase shares reserve-related income with Hyperliquid through payments based on a cost-adjusted reference rate. The arrangement gives Hyperliquid revenue linked to the collateral supporting its derivatives business.

Deribit, the largest derivatives exchange, added $365 million in USDC during the quarter. The Coinbase-owned platform pays qualifying customers monthly rewards based on their minimum daily USDC balances. In August, it expanded the program to about 70 additional countries.

Bybit increased its RLUSD holdings after launching a rewards campaign with Ripple in July. Bitget and MEXC accumulated USDGO through holding incentives and conversion promotions. In decentralized lending, Spark deposited about $247 million of RLUSD into a Morpho vault operated by Sentora. That accounted for most of Morpho’s $404 million quarterly increase across six stablecoins.

Distribution arrangements have increased costs for stablecoin issuers. Circle generated about $1.4 billion in revenue in the first half of 2026 and spent $819 million, or 59% of revenue, on distribution and transaction costs. It reported another $473 million in operating expenses and network investment, leaving about $103 million in net profit.

Coinbase remained Circle’s largest distribution partner. Average USDC holdings across Coinbase products reached a record $20 billion in the second quarter, up 44% from a year earlier. Circle also signed a five-year distribution agreement with Binance, which invested $100 million in the company.

PayPal-backed PYUSD offers a 4.5% incentive on up to $1 billion in deposits through USD.AI. Stripe-owned Bridge launched Open USD in September with a structure designed to return most reserve income to distribution partners.

Despite the decline in exchange balances, USDT remained the leading stablecoin in payments during the first nine months of 2026. Stablecoins processed $482 billion in classified payments from January through September. USDT accounted for 84%, or about $405 billion.

Payment value rose 45% from the same period a year earlier, while transaction counts increased 71% to 1.04 billion. The average payment fell from $544 to $462. September recorded $72 billion in payments, the highest monthly amount in the dataset, and Tron processed about two-thirds of the classified value.

At the end of September, the tracked exchanges held about $85 billion in stablecoins. USDT accounted for roughly two-thirds of the total, with Binance alone holding $41 billion.