Tether loses $6.6B in market cap as banks bet $270M on Project Faro

Tether’s market capitalization fell by $6.6 billion as stablecoin redemptions deepened a broader liquidity squeeze across crypto markets. In parallel, a group of major banks committed $270 million to Project Faro, a tokenized settlement initiative aimed at the stablecoin arena currently controlled by Tether and Circle. The twin developments highlight a shift in stablecoin supply toward bank-backed infrastructure even as incumbent issuers face accelerating outflows. Tether’s shrinking float and Circle’s dominant position remain the key gauges for near-term liquidity conditions. Market participants will watch whether Project Faro’s bank consortium converts its initial funding into live issuance and whether stablecoin redemptions stabilize or extend the drawdown.