Stablecoin Market in Upheaval: Tether Scales Back as European Banking Alliance Prepares Counteroffensive

Stablecoin Market in Upheaval: Tether Scales Back as European Banking Alliance Prepares Counteroffensive

The global stablecoin market stands before a significant reordering. While market leader Tether has been forced to massively scale back its originally ambitious fundraising plans, an impressive banking alliance is forming in Europe that seeks to challenge American dominance with a regulated euro-stablecoin. These parallel developments paint a revealing picture of power dynamics and strategic shifts in a market that is increasingly becoming a battleground between private crypto companies and traditional financial institutions.

The events reveal not only the limits even profitable crypto companies face in capital raising, but also the growing unease of European regulatory authorities toward US-centric stablecoin infrastructure—a development with far-reaching implications for the entire digital financial landscape.

The Facts

Tether, the world's leading stablecoin issuer, has drastically adjusted its financing goals. Instead of the originally targeted $15 to $20 billion USD, Paolo Ardoino's company is now aiming for merely $5 billion USD ^[1]. The original amount would have made Tether, with a valuation of nearly $500 billion USD, one of the world's most valuable private companies ^[1].

According to a Financial Times report, investors were unwilling to provide the demanded volume, whereupon the company's advisors suggested adjusting the goals ^[1]. However, CEO Paolo Ardoino contradicted this portrayal in an interview, describing the higher figure as "the maximum we would have been willing to sell," not an actual target ^[1]. He emphasized that Tether, due to its high profitability, has no pressing capital need and that completely forgoing a capital raise would be acceptable ^[1].

Tether's financial situation appears to support this statement: the company recently reported a profit of $10 billion USD—albeit slightly below the previous year's figure ^[1]. Demand for the USDT stablecoin remains robust: over the past twelve months, Tether issued tokens worth a total of $50 billion USD ^[1]. Additionally, the company recently launched a US-compliant stablecoin (USAT) specifically targeting banks, exchanges, and payment service providers in the United States ^[1].

Parallel to Tether's challenges, a significant counter-movement is forming in Europe. Spanish major bank BBVA has joined a European banking consortium planning a joint euro-pegged stablecoin ^[2]. The consortium comprises twelve significant institutions, including BNP Paribas, ING, UniCredit, CaixaBank, DZ BANK, KBC, SEB, Danske Bank, DekaBank, Banca Sella, and Raiffeisen Bank International ^[2].

For implementation, the joint venture Qivalis was founded with headquarters in Amsterdam, which is to be licensed as an e-money institution ^[2]. The euro-stablecoin is intended to accelerate payments between banks and enable the settlement of tokenized assets, particularly cross-border payments between business customers as well as the efficient settlement of digital financial instruments ^[2]. The stable cryptocurrency is to be issued within a regulated framework and comply with the requirements of European crypto regulation MiCA, with a planned operational start in the second half of 2026 ^[2].

The motivation behind this initiative is clear: euro-stablecoins can reduce dependencies on US payment service providers. The European Central Bank explicitly warned in July of last year about the rapid spread of US-denominated stablecoins ^[2].

Analysis & Assessment

Tether's failed fundraising ambitions—independent of Ardoino's public damage control—send a significant signal: even the most profitable company in the crypto sector encounters reluctance from institutional investors when it comes to valuations in the triple-digit billion range. This reflects a growing skepticism toward crypto valuations after the excesses of 2021 and subsequent collapses like FTX. Despite Tether's impressive profitability, investors appear to have concerns regarding regulatory risks, transparency issues, and the long-term sustainability of the business model.

The European banking alliance, on the other hand, demonstrates a fundamental strategic shift: traditional financial institutions are no longer appearing merely as critics or passive observers, but as active architects of stablecoin infrastructure. The choice of a MiCA-compliant, bank-led model could prove to be a competitive advantage, particularly for institutional use cases where compliance and regulatory certainty are priorities. Unlike private stablecoin issuers, Qivalis benefits from the established credibility and existing customer relationships of its member banks.

For Bitcoin investors and the broader crypto market, these developments are significant: stablecoins function as critical infrastructure for trading and liquidity across the entire digital asset ecosystem. A more fragmented stablecoin market with stronger regional and regulatory differentiation could initially lead to higher complexity, but in the long term also to more robust, legally secure structures. The success of regulated, bank-led stablecoins could also encourage institutional actors to invest more heavily in digital assets like Bitcoin, as concerns regarding fiat on-ramps and off-ramps diminish.

Historically, however, state and banking initiatives in the crypto space have often struggled with innovation inertia and lack of market acceptance. The launch in the second half of 2026 gives Tether and other private providers considerable lead time to further consolidate market share. Nevertheless, the regulatory backing and combined force of twelve European major banks should not be underestimated—especially not in an increasingly regulated environment.

Conclusion

• Tether's reduced fundraising ambitions reveal institutional skepticism toward crypto valuations in the triple-digit billion range, despite impressive profitability—a sign of persistent concerns regarding regulatory risks and long-term sustainability

• The European banking alliance with twelve major banks marks a paradigm shift: traditional financial institutions are evolving from observers to active architects of stablecoin infrastructure, using MiCA compliance as a strategic competitive advantage

• The regional fragmentation of the stablecoin market between US-dominated private providers and European banking consortia could lead to higher complexity in the short term, but in the long term to more robust and legally secure structures for the entire digital asset ecosystem

• For Bitcoin and the broader crypto market, these developments are relevant: regulated, bank-led stablecoins could encourage institutional investors as concerns regarding fiat infrastructure diminish—however, it remains to be seen whether the initiative can achieve the necessary market acceptance against established players

• The lead time until 2026 gives Tether considerable room for market consolidation, while simultaneously the regulatory landscape could increasingly favor compliance-oriented solutions—a race between first-mover advantage and regulatory legitimacy