What happened?
Stablecoin issuer Circle has again raised the redemption fees for USDC, primarily targeting high-value redemption users.
In the increasingly competitive stablecoin market, the leading stablecoin USDT from Tether still maintains its leading position with a market share of 70%.
Circle plans to move to Wall Street in 2025 and actively promote its initial public offering (IPO).
Circle adjusts USDC redemption fees impacting high-value transactions.
Stablecoin issuer Circle has announced an increase in the redemption fees for its stablecoin USDC, marking the second price adjustment this year.
Previously, exchanging USDC through the Circle Mint platform was free and unlimited, but starting September this year, Circle began charging fees for transactions exceeding $2 million per day. The purpose of adjusting the fee structure is to respond to the high demand for market liquidity.
Circle's new fee model primarily targets institutional investors and high-frequency trading users, with transaction fees starting from 0.03% per transaction, reaching up to 0.1% for transactions exceeding $15 million. However, if users are willing to wait two days, they can still avoid transaction fees.
A Circle spokesperson pointed out that this fast redemption service is somewhat similar to the rapid transaction fees charged by banks and other financial institutions, reflecting the market's demand for efficient liquidity.
However, some users believe that the continuously rising fees may significantly reduce USDC's attractiveness in future transactions, especially with more new stablecoin issuers entering the market this year, making competition among stablecoins more intense.
Tether's market share continues to lead, while Circle's market share declines.
The competition in the stablecoin market is becoming increasingly fierce, especially as Tether's USDT stablecoin remains firmly in the market leadership position.
According to data from DefiLlama, USDT currently has a market value of $120 billion, accounting for nearly 70% of the market, while USDC accounts for less than 20%, with a market value of about $34 billion. Although Tether also charges a 0.1% fee for large transactions, it is currently only applicable to transactions exceeding $100,000.
In addition to the market share gap, Circle also faces challenges in revenue and valuation. According to Bulletin data, Circle's valuation in the secondary market is approximately $4.5 billion, a significant decline from $7.7 billion in 2022, reflecting a decrease in market confidence in its competitiveness.
Circle had previously attempted to go public through a merger with a special purpose acquisition company (SPAC), but ultimately canceled the plan in 2022. Circle has also refiled its IPO application with the U.S. Securities and Exchange Commission (SEC) and plans to move its headquarters to Wall Street in 2025 to enhance market recognition.
💡 Special Purpose Acquisition Company (SPAC): An investment fund with no business, established solely to raise funds through an IPO to acquire or merge with a target company.
Apart from the United States, Circle is also actively expanding the international application scenarios of its stablecoin. In September this year, Circle announced the integration of USDC with local banking systems in Brazil and Mexico, allowing local businesses to use USDC for transactions instantly.
However, despite Circle's continuous business expansion, its market share has significantly declined over the past two years. With traditional financial institutions entering the stablecoin space, such as asset management company BlackRock planning to launch the BUIDL token as collateral for derivatives trading, and fintech company Robinhood exploring stablecoin applications under the EU framework, the challenges Circle faces in the future will be even more severe.
Reference: Bloomberg, Cointelegraph.
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