Tether Emerges as Major Crypto Lender Since Collapse of the Sector

Tether captures 70% market share as other centralized lenders struggle to recover from 2022 crypto meltdown

- Bloomberg

The largest stablecoin issuer, Tether Holdings SA, has become one of the major sources of liquidity in the digital asset market since the crash that nearly wiped out the entire crypto-lending sector several years ago.

The closely-held firm was among the top three so-called centralized lenders along with billionaire Mike Novogratz's Galaxy Digital and the financial services company Ledn, with a combined loan book size of nearly $10 billion as of the fourth quarter of 2024, according to a research report by Galaxy.

Those three firms make up 89% of the CeFi lending market as opposed to decentralized finance, where borrowers take out loans via programmed protocols without intermediaries.

The rise of Tether in the sector follows the collapse of a number of major crypto-native lenders such as BlockFi, Celsius Network and Genesis Global Capital. Those firms declared bankruptcy due in part to the 2022 crypto market meltdown and the lack of risk management.

Tether's market share among centralized lenders increased to around 70% in late 2022 from less than 20% for the second quarter of 2021. That figure was still about 70% as of the last quarter of 2024, the report said.