Tether (USDT), the best-known stablecoin, is approaching a market capitalization of $100 billion. This demonstrates Tether’s undeniable market dominance, but it also draws the attention of regulators of the stablecoin, with potential implications for the entire cryptocurrency landscape.

Tether’s success depends on its core value proposition: stability. Unlike bitcoin and its counterparts, which are often subject to fluctuations, Tether is pegged to the U.S. dollar, maintaining a near-constant value of $1. This stability attracts investors, making it the preferred choice for trading, storing value, and participating in decentralized financial protocols (DeFi).

However, Tether’s path to reaching the $100 billion mark is not so easy. A major obstacle is regulatory scrutiny. Although Tether operates outside of U.S. jurisdiction, its reliance on the U.S. dollar and potential interactions with U.S. entities expose it to potential scrutiny from U.S. regulators, particularly through the Office of Foreign Assets Control. This regulatory uncertainty hangs like a dark cloud over Tether’s future, and some experts doubt its long-term sustainability.

Tether’s looming anniversary has broader implications for the entire stable coin landscape. Its success has triggered a domino effect, leading to significant growth in the combined market capitalization of other major stable coins such as USDC, DAI, BUSD, and TUSD. This growth is indicative of the increasing role of stable coins in the crypto ecosystem, facilitating transactions, providing stability, and enabling innovative DeFi applications.

While Tether stands on the cusp of a historic achievement, its future trajectory remains uncertain. While the company’s stability, financial performance and role in DeFi are undeniable advantages, the regulatory shadow and concentration risk pose significant challenges.