Circle's strong market debut breaks through, regulation accelerates, and the stablecoin battle approaches a turning point?

整理：ChainCatcher

Circle (CRCL) had a strong opening on its first day of trading, triggering multiple circuit breakers, with the stock price briefly soaring to $103, becoming the first stablecoin issuer to successfully ring the bell on Wall Street. This not only marks a capital leap for Circle but also signifies that stablecoins are accelerating their entry into the mainstream financial system.

At the same time, the global regulatory landscape is rapidly evolving: Hong Kong has officially launched a stablecoin licensing system, and the U.S. "Genius Act" is advancing quickly, with the regulatory map becoming increasingly clear. On-chain data shows that stablecoin trading volume has surpassed that of Visa and Mastercard, indicating a quiet shift in the power dynamics of the payment sector.

In this edition of Space "Circle IPO ------ Changes in the Global Crypto Landscape," we invite six guests: Kiwi, Head of Research at OKX Ventures; Bruce, Investment Head at Summer Ventures; Kevin, Chinese Head at Frax Finance; Vava, Market Head at Infini; Claudio, Founder of KODO; and Levis, CMO of APACX, to engage in in-depth discussions on Circle's business model, the regulatory game surrounding stablecoins, and the competitive logic between USDC and USDT, to uncover the real opportunities and challenges.

The full version can be accessed for playback: https://x.com/i/spaces/1RDGlzWoveqxL

1: Can Circle's successful IPO help USDC narrow the market share gap with USDT (currently about 5 times apart)? Can the listing change the competitive landscape of stablecoins, even challenging USDT's long-term dominance?

KiWi: Circle's business model exhibits structural characteristics: 66% of its revenue relies on low-risk asset interest (with $1.6 billion over two years), and its profitability is deeply tied to interest rates; the cost side heavily depends on channels, with distribution fees to Coinbase alone reaching $908 million, and total channel costs exceeding $1 billion.

This "heavy channel, light product" model faces dual challenges: a lack of independent growth engines and slow conversion of compliance advantages. The $7 billion valuation reflects long-term market optimism, but for USDC to break through the USDT barrier, it must reconstruct its business logic—reducing channel dependence and establishing a self-sustaining ecological loop, which is a key turning point for future competition.

Bruce: I see this from two perspectives. In the long term, the advancement of the U.S. "Genius Act" will significantly promote the growth of the stablecoin market. JPMorgan predicts that by 2028, the market size will grow from the current $250 billion to $1 trillion, with an average annual growth rate of about 50%. If USDC maintains its current share of about 24%, its market value and profits will increase significantly, with annual profits expected to grow several times from the current $150 million.

However, in the short term, USDT has clear advantages in emerging markets and exchanges, with over 30% of trading volume on the Tron blockchain, showcasing strong adaptability to non-compliant markets. For USDC to surpass, global regulatory coordination is necessary, which will take at least five years. The 2023 Silicon Valley Bank incident caused USDC to de-peg to $0.87, exposing its market confidence and liquidity issues, leading to a decline in market share.

While USDC's scale will expand, its market share may remain at 20%-30% in the coming years, making it difficult to truly challenge USDT's leading position.

Kevin: Circle's IPO aims to enhance transparency and institutional trust, attracting institutions like Ark Invest, but there remains a gap between USDC and USDT in terms of end users. The network effects in the stablecoin industry make it challenging to break through liquidity barriers, and the current downturn in DeFi restricts USDC's development.

Although the listing enhances Circle's brand value, USDT's ecological advantages in scenarios like cross-border trade are unlikely to be replaced in the short term. Emerging players may break through in niche areas, but in the next five years, USDC may maintain the status quo, with limited potential to disrupt USDT's dominance. USDC's circulation increased from $24 billion to over $60 billion, with a growth rate of 154%, far exceeding USDT. If this trend continues, USDC may catch up in the $1 trillion market by 2028. BCG predicts that by 2030, the scale could reach $16-30 trillion.

The global regulatory trend is reshaping the landscape, with the U.S. incorporating stablecoins into the financial system, and Singapore following suit. USDC has become the preferred choice for pro-U.S. economies, contrasting with USDT, which primarily operates on unregulated chains. USDT has the upper hand in the short term, but as financial regulations shift, USDC's compliance advantages may convert into market share within 5-10 years. We must recognize USDC's potential while also facing its short-term challenges.

Claudio: USDT users fall into two categories: smart hardware exporters who continue to use it despite knowing alternatives (considering ecological synergy), and traditional traders who may not even know USDC exists, giving USDT a first-mover advantage.

After the stablecoin bill is passed, user migration will still be constrained by inertia. Tech companies are reluctant to increase operational complexity, while traditional enterprises rely on platform recommendations. For USDC to break through, it needs to build a complete application scenario network, especially by strengthening partnerships with payment platforms to change user habits. This ecological construction requires long-term investment, making it difficult to shake USDT's dominant position in the short term.

USDC represents a compliant direction, while USDT focuses on the "underground economy," creating differentiated competition. USDC expands the incremental market, while USDT maintains its existing advantages. The Tron blockchain continues to optimize the experience (e.g., gas fee payment), and this scenario-based innovation is key to USDT's lead. In the long run, both models may develop in parallel, with market demand determining their boundaries.

2: How will the advancement of the U.S. "Genius Act" impact the industry landscape? How should its pros and cons be weighed?

Bruce: The implementation of the Genius Act marks a new phase in stablecoin regulation, with core requirements mandating that large issuers must be licensed and maintain 100% reserves in U.S. dollars/Treasuries, which will enhance industry transparency and eliminate risks similar to the Silicon Valley Bank incident. Compliant entities like Circle will benefit significantly, as traditional financial institutions are more likely to choose compliant stablecoins like USDC, expanding their institutional user base.

The act poses challenges for non-U.S. projects like USDT, as their lack of transparent reserves and registration qualifications may face risks of being classified as securities, affecting their operations in the U.S. market. The innovative models of decentralized stablecoins may also be hindered. Under tightening global regulations, compliant entities will gain developmental dividends, but this may stifle innovative vitality and increase market concentration.

Vava: The core purpose of the U.S. passing the Genius Act to regulate stablecoins is to maintain the dominance of the U.S. dollar and curb the influence of USDT, which acts like a "chain-based Federal Reserve." The act forces non-U.S. stablecoins to either comply or exit the market, allowing compliant projects like USDC to gain policy dividends.

As practitioners, we find that the landing of stablecoins still relies on traditional banking settlement systems, revealing the contradiction between regulation and innovation: providing compliant pathways for innovations like RWA while potentially limiting native on-chain innovations. This dual effect will continue to influence the mainstreaming process of stablecoins.

Claudio: The core of the Genius Act is to strengthen the payment functionality of stablecoins, led by the Office of the Comptroller of the Currency, integrating them into the existing banking regulatory framework. Long-term compliant entities like Circle become the biggest beneficiaries, aligning with their years of investment.

The act has differentiated impacts on various stablecoins: payment-type stablecoins like USDC gain institutional dividends, while investment-type algorithmic stablecoins like USDE face compliance barriers. USDT is at a strategic turning point; full compliance will solidify its mainstream market position but may sacrifice gray market operations, making its adjustment strategy an important case to observe regulatory effectiveness. This division reflects market natural selection rather than regulatory flaws.

KiWi: The Genius Act clears obstacles for compliant projects like USDC through full reserves and foreign capital restrictions, but it also creates conditions for financial giants like BlackRock to enter the market.

This regulatory clarification will trigger a chain reaction of "rule establishment - resource aggregation - competition escalation," meaning that while Circle may enjoy policy dividends in the short term, it will face strong challenges from traditional financial giants in the medium to long term. The current market landscape still holds significant uncertainties, and the ultimate outcome remains to be seen.

3: After Hong Kong's stablecoin licensing system is implemented, how will the global stablecoin landscape evolve? Will users trust state-regulated fiat stablecoins (like the Hong Kong dollar stablecoin) more, or market-driven U.S. dollar stablecoins?

Levis: The stablecoin regulation in Hong Kong is unlikely to shake the 95% market dominance of U.S. dollar stablecoins in the short term. History has shown that alternatives like the euro and gold stablecoins have failed to break through the established mature ecosystem of the U.S. dollar, including infrastructure like OTC networks and exchange pricing mechanisms.

Emerging fiat stablecoins are more realistically positioned to create incremental value within the existing system rather than directly challenging U.S. dollar stablecoins. Hong Kong can focus on optimizing localized services like cross-border payments to find differentiated space, but establishing an ecosystem independent of the U.S. dollar faces significant migration costs in terms of user habits and infrastructure. Market choice always holds more decisive power than regulatory intent.

Claudia: Although the Hong Kong stablecoin bill is unlikely to shake the dominance of U.S. dollar stablecoins, it signals a push for the internationalization of the Hong Kong dollar and the renminbi, providing important compliance identity for practitioners.

However, current regulations mainly govern the issuance phase, lacking specific constraints on the circulation phase, such as anti-money laundering guidelines, creating a "heavy issuance, light circulation" model that allows the network effects of U.S. dollar stablecoins to continue dominating the market. A true change in the landscape will require more comprehensive circulation regulatory policies to be implemented.

KiWi: The development of Hong Kong's stablecoin is constrained by the process of renminbi internationalization rather than technical factors. Currently, renminbi stablecoins mainly serve Chinese enterprises for cross-border settlements, requiring deep integration with the traditional financial system, which is challenging. The traditional use cases for offshore renminbi are also difficult to directly migrate to the stablecoin system.

While strategically supporting renminbi internationalization, for the Hong Kong dollar/renminbi stablecoin to truly break through, it still needs to address practical obstacles like offshore clearing networks and international acceptance. Therefore, Hong Kong's stablecoin layout is more of a hedging strategy rather than a short-term solution to replace U.S. dollar stablecoins.

Kevin: The strategic positioning of Hong Kong's stablecoin is to provide a testing ground for the internationalization of China's digital currency, adopting a proactive model of "regulate first, then develop," contrasting with the passive regulation in the U.S. The upcoming Hong Kong dollar/U.S. dollar dual-pegged stablecoin from JD.com relies on its e-commerce ecosystem to build application scenarios while seeking breakthroughs within the regulatory framework, reflecting this experimental characteristic.

This reflects the industry's consensus: an ideal stablecoin needs to balance regulatory recognition with market consensus. As a financial hub connecting China and the international market, Hong Kong's dual attributes help cultivate regional stablecoin benchmarks. While it may be difficult to shake the global position of U.S. dollar stablecoins in the short term, it may form differentiated advantages in specific markets like Southeast Asian cross-border trade. The ultimate form of stablecoins will be a dynamic balance between regulatory and market forces.

Bruce: The U.S. dollar's dominant positions in global payments (47%), trade financing (83%), and foreign exchange reserves (43%) determine the ruling advantage of U.S. dollar stablecoins. The Hong Kong dollar stablecoin is constrained by the linked exchange rate system (1:7.75-7.85), essentially remaining attached to the U.S. dollar system, and may even indirectly reinforce the dollar's position through regional applications like the Greater Bay Area, as cross-border trade still generally requires dollar settlements.

On-chain data shows that U.S. dollar stablecoins account for 97% of trading volume, while the Hong Kong dollar stablecoin faces liquidity challenges. Although liquidity could be improved through partnerships with exchanges like Binance, the already established global network effects of the dollar present a structural barrier that is difficult to overcome. Hong Kong's attempts are more of a tactical supplement rather than a strategic overhaul.

VaVa: The Hong Kong dollar stablecoin faces threefold challenges: the U.S. dollar anchoring mechanism, lack of market consensus, and insufficient liquidity, similar to CIPS's challenges to SWIFT. Even with regulatory support, it is difficult to change user habits and network effects in the short term. In contrast, USDT is more competitive due to its existing ecosystem, and its advantages will be even more pronounced after compliance transformation.

Changes in U.S. regulatory policies bring new opportunities. Although the Genius Act has vetoed provisions for tech companies to issue stablecoins, if U.S. tech giants (like PayPal) choose to establish compliant systems in Hong Kong, similar to Tesla's factory model in China, it could create new competitive variables for the Eastern market. Such fundamental changes, rather than gradual improvements, are what can truly challenge the dominance of U.S. dollar stablecoins.

4: What is the actual landing situation of stablecoins in on-chain payment scenarios? Can applications like PayFi break existing limitations? What are the key driving forces for the next breakthrough?

Kevin: The development of stablecoin payments has entered a critical period. Although on-chain transaction volumes have surpassed the total of Visa and Mastercard, applications in daily consumer scenarios remain limited. Applications like PayFi show great potential, but achieving scale requires building a complete business ecosystem.

Taking FlexNet as an example, by connecting issuers, payment channels, and business scenarios, stablecoins are embedded in actual transactions while utilizing U.S. Treasury yields to enhance the value of deposited funds, creating a unique advantage of "payment + yield." In the future, as more licensed institutions join and scenarios expand, areas like cross-border e-commerce and remittances may be the first to break through. The real breakthrough point lies in finding a killer application that satisfies both merchant efficiency and user returns.

Levis: PayFi shows differentiated development trends globally, particularly excelling in regions with weak financial infrastructure. For instance, in Venezuela, local users have begun using stablecoins to pay for digital service subscriptions, reflecting that 1.4 billion unbanked individuals are establishing alternative financial channels through stablecoins. The current PayFi ecosystem is diversifying, including innovative models like cross-border acquiring and on-chain currency exchange. Notably, in regions with severe inflation, the combination of "stablecoin payments + RWA yields" (7-10% annualized) demonstrates unique advantages.

As global debt surges (growing by $12 trillion over the past five years) and pressures fiat currencies to depreciate, this demand-driven development model is likely to become a key turning point for the widespread adoption of stablecoin payments, proving more sustainable than regulatory pushes.

Claudio: Stablecoin payments exhibit unique advantages in cross-border payments and financially underserved regions. On one hand, they are breaking through the efficiency bottlenecks of traditional cross-border payment systems like Swift; on the other hand, in countries with severe inflation like Venezuela, they have become an important channel for residents to acquire U.S. dollar assets.

However, in mature payment markets (like Alipay in China), stablecoins struggle to replace existing local payment methods. Therefore, corporate cross-border payments and individual remittances in specific regions become the most promising breakthrough points. The entry of large tech companies could be key to driving adoption, as they possess ready-made user scenarios and can enhance the credibility of stablecoins through corporate trust. This "application scenario + credit endorsement" model is more market-disruptive than mere technological innovation.

5: Under the trend of stablecoins becoming financial infrastructure, what kind of competitive relationship will traditional banks and compliant stablecoin issuers (like Circle) present? Is it possible to give rise to a new form of "digital banking"?

Claudio: Stablecoins are upgrading to financial infrastructure, reshaping the relationship between banks and issuers. Circle's cross-chain settlement and merchant service modules challenge the intermediary business of banks, achieving "disintermediation." The relationship may undergo three phases: short-term cooperation (banks accessing USDC liquidity pools), mid-term competition (banks building their own stablecoins), and ultimately mergers and acquisitions (banks acquiring stablecoin technology). This will give rise to "hybrid banks," combining DeFi efficiency with traditional compliance, reshaping banking operations through algorithmic management and smart contracts.

Industry mergers and acquisitions confirm this trend: cases like Visa investing in BBNK and Stripe acquiring Bridge show the two-way integration of traditional finance and Web3 payments. The Circle Payment Network targets SWIFT pain points, achieving global capital flow through on-chain settlement. Compared to multi-country capital pool models like Airwallex, USDC's on-chain transfer + fiat withdrawal avoids capital fragmentation while maintaining compliance, offering a structural alternative advantage.

Bruce: Compliant stablecoin issuers like Circle are giving rise to new digital banking models, focusing on payment and settlement infrastructure rather than traditional deposit and loan businesses. Development shows three main characteristics: complementary cooperation with traditional banks, competition from large institutions building their own systems, and potential disruption from decentralized projects.

This will reshape the industry landscape, forming a three-tier competitive structure of "traditional banks - compliant stablecoins - decentralized protocols," with all parties engaging in a game across regulatory, technological, and user dimensions, driving the digital transformation of financial infrastructure.