Comparison of Tether and Circle stablecoin policies: 2-year freeze of $329 billion USDT, 30 times more aggressive than USDC

Source: TokenPost Original Title: Tether freezes $329 billion over 2 years, 30 times more proactive than USDC Original Link:

Overview

Tether has frozen approximately $329 billion worth of USDT over the past two years and blacklisted 7,268 addresses. In comparison, its competitor Circle’s USDC only froze $109 million during the same period, with 372 addresses banned. This vividly demonstrates the significant differences in law enforcement cooperation approaches between the two stablecoin issuers.

Large-scale freezing centered on the Tron network

According to the latest on-chain report released by AMLBot, a cryptocurrency AML analysis firm, Tether has carried out extensive freezing operations on the Ethereum and Tron networks. Particularly on the Tron network, funds frozen in blacklisted wallets amount to $17.5 billion, reflecting Tron’s widespread use in Asia, P2P markets, and cross-border payments. Based on total frozen amount and number of addresses, Tether has taken approximately 30 times more decisive action than USDC.

Tether’s flexible policy: freezing without court orders

Tether currently collaborates closely with law enforcement agencies in over 59 countries, totaling more than 275 agencies. Even without direct court orders, it can freeze wallets based on warnings related to hackers or investigations. In July 2024 alone, over $130 million worth of USDT was frozen, including $29.6 million linked to Tron funds associated with the Cambodian sanctions target, Huihuang Group.

Reactions on social media to Tether’s prompt responses have been mixed: some praise the “quick victim remediation,” while others worry about the “risks of centralized issuance.”

Burn-and-Reissue model: Tether’s unique “destroy-reissue” approach

Tether’s uniqueness lies in that frozen USDT is not merely held but is “destroyed” after investigations are completed, then reissued in the form of “clean tokens” of the same amount, transferred to victims or law enforcement agencies. According to AMLBot data, by the end of 2025, the average monthly destruction amount has exceeded $25 million. This method offers advantages in victim compensation speed but has also drawn criticism for overly concentrated issuer power.

In April 2025, a Texas-based US company sued Tether after $44.7 million of its assets were frozen at the request of Bulgarian police, claiming that Tether did not follow proper international procedures.

USDC’s conservative approach: prioritizing legal certainty

In contrast, Circle only freezes USDC when there is a specific legal basis such as court orders or sanctions lists. Freezing is usually done in bulk at once, and once addresses are banned, funds remain frozen without a destroy-reissue process. This reflects a focus on legal clarity and regulatory compliance.

Recently, Circle has partnered with an exchange to use USDC as the platform’s core stablecoin and is pursuing a regulation-based expansion strategy covering trading, settlement, and staking products.

Balancing in market expansion

A recent address poisoning phishing scam resulted in a trader losing about $50 million worth of USDT, highlighting the importance of rapid response. A former top exchange CEO also stated that establishing wallet-level blacklists is necessary to enhance user protection, and he expressed approval of Tether’s approach.

As stablecoins continue to expand into traditional finance, balancing user protection, regulatory certainty, and centralization risks will become the most contentious issues in the cryptocurrency industry next year.

Key points

Market interpretation: The responses of Tether and Circle reflect different philosophies, with policy choices impacting regulatory market access, fraud response, and user trust. Tether’s rapid intervention may be effective for victim compensation in the short term but also brings regulatory uncertainty and criticism of centralization.

Strategic considerations: Stablecoin users should fully understand each project’s freezing policies. If prioritizing fraud victim compensation, Tether may be more advantageous; if valuing legal clarity and predictability, USDC might be more suitable. Exchanges and DApp services should strategically choose stablecoins as core assets based on their policy directions.