Circle Moving Fast in Stablecoin Race 🏃🏼

Prathik Desai

Nameet Potnis

, and

Thejaswini M A

Apr 22, 2025

Happy Tuesday Dispatchers.

Circle is moving with lightning speed ahead of its anticipated IPO, albeit the going-public plans hit a pause after US President Donald Trump’s tariff tantrums triggered a market meltdown.

It’s making moves at multiple fronts — payment networks, bank charter applications, institutional connections and all this while closing in on the market leader Tether. For context, the USDC issuer has closed in the market share gap between itself and Tether from 50 percentage points to just 35.

In today's edition, we examine:

USDC's accelerating growth closing the gap with Tether
How Circle's new payments network aims to replace antiquated cross-border systems
Why Circle and other crypto firms are suddenly racing for banking charters
How traditional banks are preparing their stablecoin counteroffensive

Let's get started with why this matters beyond the crypto bubble.

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The $2 Trillion Stablecoin Race

The stablecoin competition is getting a lot more crowded. Traditional financial giants are preparing to make their moves as regulatory clarity emerges, threatening to disrupt the current duopoly enjoyed by Tether and Circle.

The top two stablecoins have collectively lost a 4-percentage-point market share in the last five months.

"We are going to see banks issuing stablecoins, as they are under MiCA. By the end of this year, you are going to see maybe 50 more stablecoins," said Ran Goldi, SVP of payments at Fireblocks, in a recent interview with Coindesk.

The stablecoin market could balloon to a staggering $2 trillion by the end of 2028 — nearly ten times today's $235 billion total supply, showed a Standard Chartered report.

Read: The Great Stablecoin Collision 🪙

Behind closed doors, dozens of banks are drafting strategic plans for stablecoin initiatives, with most expected to finalise their approaches by the end of this quarter. "It will be interesting to see if banks build something on their own, or use BNY Mellon, for instance, that serves banks, or a vendor like Fireblocks," Goldi noted.

This looming competitive threat explains why Circle is moving with such urgency across multiple fronts. As traditional financial institutions prepare their entry, the window for securing market position is rapidly closing.

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The Stablecoin Race Heats Up

USDC’s intent and quick moves is evident from the fact that its market cap climbed to more than $60 billion as of April 19, representing a remarkable $17 billion increase from its $44 billion starting point at the beginning of the year.

That’s about a 40% jump. For context, Tether’s USDT market cap grew 8% during the same time. Though Tether remains the dominant force with nearly 2.5x USDC's market cap, the growth gap is shrinking, and shrinking fast.

USDT’s dominance in market share has gone almost 10 percentage points to 61.85% in the last five months from more than 70%, while Circle has gained about six percentage points.

The data reveals a widening preference gap between the two stablecoins. Regulated entities and DeFi protocols are prefer USDC, due to favourable regulatory clarity for Circle.

The advantage is most evident in Europe. USDC is licensed under MiCA, giving it access to 27 EU nations with 450 million people. USDT, by contrast, is not.

Regulators are not the only roadblocks to Tether’s extended dominance.

Coinbase CEO Brian Armstrong recently said that the exchange's new "stretch goal" is to supplant Tether's USDT as the world's "number one dollar stablecoin."

Many other exchanges such as Kraken and Crypto.com have also delisted USDT in their Europe markets.

Breaking Banking Rails

On Tuesday, Circle unveiled a product to reduce costs and delays while moving money across borders. The Circle Payments Network (CPN) aims to dismantle the aging infrastructure of global finance using stablecoins as the rails.

"We are not just building stablecoins. We are building a modern infrastructure for global payments," Circle said in a post on X.

International banking settlements remain notoriously slow, expensive, and constrained by legacy systems that often shut down on nights and weekends. Circle's alternative promises instant, 24/7 transfers using fully reserved digital dollars (USDC) and euros (EURC).

Circle has brought on board a roster of 20+ design partners already participating. including dLocal, WorldRemit, BVNK, Yellow Card, and Coins.ph.

This partner lineup signals a clear focus on institutions operating in emerging markets and high-volume remittance corridors — areas where traditional banking has most dramatically failed to deliver.

Circle's network move has a simple, yet foundational, rationale — the transformation of a stablecoin issuer into a provider of critical financial infrastructure that moves those assets at scale.

"Circle is launching a payments network that is initially targeting remittances but is ultimately aiming to rival Mastercard and Visa," said a person familiar with the plans.

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The Banking Gambit

While launching its payments network, Circle is simultaneously preparing to cross the regulatory Rubicon by applying for a US banking charter or license, according to The Wall Street Journal.

Circle isn’t alone, though. BitGo, the custodian behind the Trump family's stablecoin USD1, is pursuing the same path, along with Coinbase and Paxos. The timing aligns perfectly with evolving US stablecoin regulations that may soon require stablecoin issuers to be licensed.

Why pursue banking charters now?

A banking charter would allow Circle to operate more like traditional lenders, potentially taking deposits and making loans.

It also comes with significant costs. Crypto firm Anchorage Digital reportedly spent millions to comply with regulations after obtaining its federal charter.

The reward might be big — access to a Federal Reserve master account, the holy grail that has eluded crypto-native banks like Custodia despite years of efforts. Such access would provide Circle with the closest level of access to the US money supply available to financial institutions.

Token Dispatch View 🔍

Circle's multi-pronged strategy reveals that its preparing for something deeper than merely a pre-IPO positioning. It's a deliberate attempt to bridge the gulf between traditional finance and crypto that no other stablecoin issuer has successfully navigated.

The convergence of Circle's institutional-grade payments network, banking charter ambitions, and USDC's regulated status creates an unprecedented moat against both Tether and incoming TradFi competitors. Circle is prepping a solid foundation across diverse grounds to build a solid differentiation over its competitor.

What's interesting to observe is Circle's focus on emerging markets and remittance corridors. While competitors battle for dominance in established Western markets, Circle is also expanding beyond, quietly building infrastructure in regions where financial inclusion remains elusive.

The partner list – dLocal (South America), WorldRemit (remittances to Africa and Asia), Yellow Card (Africa), Coins.ph (The Philippines) – reads like a roadmap of next-generation remittance markets.

The MiCA licensing advantage over Tether might be Circle's most underappreciated asset. Access to 450 million Europeans through regulatory compliance is a winner-take-all scenario.

Circle's strategy indicates they understand something fundamental – the stablecoin wars won't be won on market share alone, but through infrastructure, regulatory positioning, and institutional integration.

Circle knows it can’t topple Tether in market cap anytime soon, so it’s building an entirely different category that latter, despite its size, cannot compete in with its current capabilities.

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