Key Takeaways Why are stablecoin exchange reserves dropping?

Because investors may be moving funds to self-custody, DeFi, or bracing for regulatory shifts.

Who’s leading the stablecoin surge?

Tether’s USDT leads with $19.6B in net inflows, followed by USDC and USDe.

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Stablecoins are flooding in. But oddly, they’re not sticking around.

In Q3 alone, we saw a jaw-dropping $45.6 billion in net inflows. That’s a 324% surge, with heavy hitters like Tether [USDT], USD Coin [USDC], and the fast-rising Ethena [USDe] leading the charge.

But none of this is without trouble.

Here’s what’s peculiar

Even though stablecoins are flooding into the market, exchange reserves are dropping.

Total reserves fell by $5 billion in just over a week. Binance alone saw $4B in outflows, mostly in USDT and USDC.

That kind of liquidity exit is usually a sign of reduced buying power, risk-off sentiment, or a move to self-custody and DeFi.

But there might be another angle here.

Coinbase CEO Brian Armstrong recently called out big banks for trying to kill USDC rewards via new legislation.

He warned,

“They want to undo your right under the GENIUS Act law to earn USDC rewards. Don’t let them.”

Armstrong explained his stance –

“Banks want to ban rewards to maintain their monopoly, and we’re making sure the Senate knows bailing out the big banks at the expense of the American consumer is not ok.”

If users are preparing for regulatory turbulence — or moving funds to protect their yield — that could help explain the vanishing act on exchanges.

The money’s still in the system, just not where you’d expect.

A moment worth $46 billion

Over the last 90 days, more than $46 billion in net inflows have poured into the stablecoin space. USDT led the pack with a massive $19.6B, followed by Circle’s USDC at $12.3B. And USDe?

A cool $9B, after barely making a splash last quarter.

Even PayPal’s PYUSD and MakerDAO’s USDS chipped in over a billion each. All in all, stablecoin inflows shot up 324% quarter-over-quarter.

Ethereum is the stablecoin king

All that new stablecoin money has to live somewhere, and most of it’s setting up shop on Ethereum [ETH]. Out of the $297 billion total stablecoin market cap, a massive $171 billion sits on Ethereum alone.

That’s more than double what TRON [TRX] hosts ($76B), and the rest — Solana [SOL], Arbitrum [ARB] and BNB Chain [BNB] — are basically fighting over leftovers, collectively holding just under $30B.

As for the tokens themselves, USDT still runs the game with nearly 59% market share. USDC holds a solid 25%, while Ethena’s USDe has climbed to nearly 5%.

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