- Tether has emerged as the dominant player in crypto lending with approximately 73% market share, replacing bankrupt lenders from the previous boom.
- The crypto lending landscape has shifted dramatically, with decentralized finance (DeFi) now representing the majority of lending activity compared to centralized finance (CeFi).
- Traditional finance players like Cantor Fitzgerald are entering the crypto lending market, potentially shifting the balance back toward centralized lending.
Tether has emerged as the dominant force in cryptocurrency lending, according to a new report from Galaxy Digital. The stablecoin issuer now controls approximately 73% of the centralized crypto lending market, filling the void left after all major centralized lenders from the previous crypto boom collapsed into bankruptcy.
Tether’s secured lending balance reached $8.2 billion by the end of 2024, as disclosed in their stablecoin report. With Galaxy’s data showing the entire centralized crypto loan market standing at $9.9 billion for the same period, Tether’s dominance becomes clear. The data suggests some of Tether’s lending activity extends beyond cryptocurrency.
This development raises regulatory concerns, as many countries are introducing stablecoin legislation that explicitly prevents issuers from engaging in lending activities. Such practices make stablecoin issuers resemble banks from a risk perspective. While Tether can point to its $7 billion in equity as a safety buffer, the company’s $8.2 billion in lending sits alongside other risky assets, including nearly $8 billion in Bitcoin.
The Transformed Lending Landscape
The centralized finance (CeFi) lending market is now primarily controlled by three entities: Tether, Galaxy, and Ledn, which together represent 88.6% of the market. This concentration follows the dramatic collapse of previous market leaders during the last crypto downturn.
Galaxy’s report highlights the risky practices that led to previous lenders’ downfall. These included borrowing short-term while lending long-term (similar to traditional banks), creating liquidity crises. Additionally, firms like Celsius and BlockFi extended some loans without collateral, further increasing their vulnerability.
Traditional Finance Enters the Game
The report also notes that traditional finance institutions are entering the crypto lending space. Cantor Fitzgerald, formerly led by current US Treasury Secretary Howard Lutnick, has announced plans to begin crypto lending with $2 billion in initial financing, potentially becoming a major player.
Since the previous crypto market crises, the balance of lending activity has shifted significantly toward decentralized finance (DeFi), which demonstrated resilience during volatile periods. While DeFi represented just over a third of crypto lending during the previous boom, it now dominates the sector. This shift partly reflects the fact that centralized lending in late 2024 reached only about one-third of its 2021 peak volume.
As new centralized players enter the market, including traditional finance institutions, the pendulum may swing back toward CeFi dominance in the crypto lending landscape.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- DRML Miner Opens Doors for Crypto Beginners with Renewable Energy Focus
- MANTRA Token Plunges 90%, CEO Blames Exchanges for ‘Forced Closures’
- XRP Price Prediction: What Can We Expect from Ripple in 2025?
- Bitcoin Plunges as Dalio Warns of Economic Crisis “Worse Than Recession”
- MicroStrategy Put Options Yield Lower Returns Despite Stock Decline
