The $270 billion stablecoin sector has grown significantly but still accounts for less than 8% of crypto’s total market cap, a level it has held since 2020, according to a JPMorgan research note.

That dynamic could turn the coming wave of U.S. stablecoin launches into a zero-sum contest, unless the crypto market itself expands significantly, analysts led by Nikolaos Panigirtzoglou wrote.

Tether, whose USDT is primarily used overseas, plans to debut a U.S.-compliant token, USAT. Unlike USDT, whose reserves are about 80% compliant with U.S. requirements, USAT’s backing would fully meet the new regulatory standards, the bank said.

Stablecoins are cryptocurrencies whose value is tied to another asset, such as the U.S. dollar or gold. They play a major role in cryptocurrency markets, providing a payment infrastructure, and are also used to transfer money internationally. Tether’s USDT is the largest stablecoin, followed by Circle’s (CRCL) USDC.

The passage of U.S. stablecoin legislation in July has already spurred a fresh round of launches aimed at Circle’s USDC, which dominates the U.S. market, the report noted.

While new players are jockeying for position ahead of regulatory implementation, the stablecoin market’s growth remains tied to crypto’s overall market cap, the analysts wrote.

Circle is also losing ground to competitors like Hyperliquid, whose exchange alone accounts for nearly 7.5% of USDC usage, as well as fintech giants PayPal (PYPL), Robinhood (HOOD), and Revolut, which are rolling out their own tokens, JPMorgan said.

In response, Circle is developing Arc, a blockchain tailored to USDC transactions, to improve speed, security, and interoperability and keep USDC central to crypto infrastructure.

Without significant expansion, the new wave of stablecoin competition may simply redistribute market share rather than grow the pie, the report added.

USDC supply has surged to $72.5 billion, 25% ahead of Wall Street firm Bernstein’s 2025 estimates, the broker said in a report earlier this month.

Read more: Circle’s USDC Market Share ‘On a Tear,’ Says Wall Street Broker Bernstein