Centralized crypto lending is heavily reliant on Tether, according to a recent report.
In the dynamic world of cryptocurrency, Tether (USDT) has established itself as a dominant player in the centralized (CeFi) lending market. According to Galaxy Research data for Q2 2025, Tether commands approximately a 57% market share, with $10.14 billion in outstanding loans.
This makes Tether the largest single lender in CeFi lending, outpacing competitors like Nexo and Galaxy, which hold about 11% and 6% market share, respectively. In terms of stablecoin market share, Tether leads strongly with around 60.49% to 66% of the overall stablecoin market capitalization, valued at $165.25 billion as of August 2025.
Tether's risk profile is notable. The stablecoin issuer maintains a significant equity buffer of about 3.4% of its total assets ($5.46 billion equity on $162.57 billion assets), which is stronger than many regulated banks under Basel III standards. This buffer, along with significant dividends paid ($7.357 billion in H1 2025), suggests profitability and operational scale. However, Tether continues to face regulatory scrutiny, transparency questions, and the complexities of managing cross-border payments and compliance.
Comparing CeFi lending (dominated by Tether) with DeFi lending, DeFi lending platforms accounted for roughly 49.86% of the total cryptocurrency collateralized loan market by Q1 2025, showing steady growth. This indicates that the crypto lending market is roughly balanced between centralized entities like Tether and decentralized finance lending protocols.
Historically, since the prior crypto boom (roughly 2020-21), Tether has expanded its lending share and stablecoin market dominance, maintaining stablecoin liquidity's critical role in bridging traditional finance with crypto markets. DeFi lending has grown faster in relative terms but still coexists alongside major centralized lenders focused on specific jurisdictions and client types.
Galaxy Digital, in a recent report, has pointed out the risks taken by previous lenders, such as lending long and borrowing short-term, which led to liquidity issues. As new centralized lenders enter the market, the balance could swing back towards centralized finance (CeFi).
The top three centralized lenders are Tether, Galaxy, and Ledn, with a combined share of 88.6% of the centralized finance (CeFi) market. Many countries introducing stablecoin legislation prevent stablecoin issuers from participating in lending, while Basel crypto rules for banks make it challenging, but they do allow some hedging for crypto, hence collateralized loans can be partially offset.
In summary, Tether continues as a central liquidity provider in CeFi, competing yet coexisting with a growing DeFi lending landscape. The crypto lending ecosystem is maturing into a bifurcated market, with Tether maintaining its dominance in CeFi, while DeFi lending platforms gain market share steadily.
- Insights from Galaxy Digital's recent report suggest that the balance in the centralized finance (CeFi) lending market could shift back towards centralized entities, given the risks taken by previous lenders and the entry of new players.
- Tether's substantial equity buffer, valued at $5.46 billion, amounts to approximately 3.4% of its total assets, making it stronger than many regulated banks under Basel III standards.
- In terms of technology and investing, Tether's dominance in the centralized finance (CeFi) lending market and the overall stablecoin market capitalization highlights the significant role of stablecoins in bridging traditional finance with cryptocurrency markets.
