Circle's listing has broken through strongly, supervision has accelerated, and the stablecoin battle is heading towards a watershed?

Compiled by: ChainCatcher

Circle ( CRCL ) opened strongly higher on the first day of its listing , triggering circuit breakers many times . The stock price once surged to $103, becoming the first stablecoin issuer to successfully knock on the door to Wall Street. This not only marks a capital leap in Circle , but also means that stablecoins are accelerating into the mainstream financial system.

At the same time, the global regulatory landscape is also evolving rapidly: Hong Kong has officially launched a stablecoin issuance system, the US Genius Act is accelerating, and the regulatory territory is becoming clearer. On-chain data shows that stablecoin transaction volume has surpassed Visa and Mastercard , and the power structure in the payment field is quietly changing.

In this issue of Space's " Circle IPO - Changes in the New Global Cryptomatic Pattern", we invited six guests, Kiwi , head of research at OKX Ventures , Bruce , head of investment at Summer Ventures , Kevin , head of Chinese language at Frax Finance, Vava , head of market at Infini , Claudio , founder of KODO , and Levis, Levis , to conduct in-depth dialogues on Circle 's business model, regulatory game of stablecoins, and competitive logic of USDC and USDT , to see the real opportunities and challenges clearly.

The full version can be clicked to listen to and playback: https://x.com/i/spaces/1RDGlzWoveqxL

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

KiWi : Circle's business model has structural characteristics: 66% of revenue relies on interest on low-risk assets ( $ 1.6 billion in two years), and profitability is deeply bound to interest rates; the cost side is heavily dependent on channels, and Coinbase distribution fees alone reach US$ 908 million, and the total channel cost exceeds US$ 1 billion.

This " focus on channels and light on products " model faces dual challenges: lack of independent growth engines and slow conversion of compliance advantages. The valuation of US$7 billion reflects the market's long-term optimism, but if USDC wants to break through the USDT barrier, it must reconstruct the business logic - reduce channel dependence and establish an independent ecological closed loop, which is a key turning point in future competition.

Bruce : I look at it from two aspects. In the long run , the advancement of the US Genius Act will significantly promote the growth of the stablecoin market. JPMorgan Chase predicts that the market size will increase from the current US$ 250 billion to US$ 1 trillion by 2028 , with an average annual growth rate of about 50% . If USDC maintains its current share of about 24% , its market value and profit will increase significantly, and annual profits are expected to increase several times from the current US$ 150 million.

However, in the short term , USDT has obvious advantages in emerging markets and exchanges, with Tron chain trading volume accounting for more than 30% , and its ability to adapt to non-compliant markets is outstanding. It will take at least 5 years for USDC to achieve global regulatory coordination to achieve greater transparency . The Silicon Valley Banking Incident in 2023 caused USDC to deank to $ 0.87 , exposing its market confidence and liquidity issues, resulting in a decline in share.

Although the scale of USDC will expand, its share may remain 20%-30% in the next few years , making it difficult to truly challenge USDT's leading position.

Kevin : Circle 's IPO aims to increase transparency and institutional trust. Although it attracts institutions such as Ark Investment, the gap between USDC and USDT still exists. The network effect of the stablecoin industry makes it difficult to break through liquidity barriers, and the current sluggish DeFi restricts the development of USDC .

Although listing enhances the brand value of Circle, USDT 's ecological advantages in cross-border trade and other scenarios will be difficult to replace in the short term. Emerging players can make breakthroughs in segmented areas, but USDC may maintain the status quo in the next five years, and the possibility of subverting USDT's dominance is limited. USDC circulation increased from 24 billion to more than 60 billion, with a growth rate of 154%, far exceeding USDT . If the trend continues, USDC may catch up in the trillion-dollar market in 2028 . BCG predicts that the scale may reach US$ 16-30 trillion in 2030 .

Global regulatory trends reshape the pattern, the United States incorporates stablecoins into the financial system, and Singapore follows up. USDC has become the first choice for pro-US economies, in contrast to USDT, which is mainly on the unregulated chain . USDT will dominate in the short term, but with the right turn of finance, USDC compliance advantage may convert into share within 5-10 years. We must see the potential of USDC and face its short-term challenges.

Claudio : USDT users are divided into two categories . Smart hardware exporters still insist on using them even though they know there are alternatives (considering ecological collaboration). Traditional traders do not even know that USDC exists. USDT has a first-mover advantage.

After the stablecoin bill was passed, user migration was still subject to inertia . Technology companies are unwilling to increase operational complexity, and traditional companies rely on platform recommendations. USDC needs to make breakthroughs and build a complete application scenario network, especially strengthen cooperation on payment platforms and change user habits through B -side services. This kind of ecological construction requires long-term investment, and the dominance of USDT in the short term is difficult to shake.

USDC represents the compliance direction, while USDT focuses on the " underground economy " to form differentiated competition. USDC expands the incremental market, while USDT maintains its stock advantage. Tron chain continuous optimization of experience (such as gas fee payment), this scenario-based innovation is the key to USDT's leading position. In the long run, the two models may develop in parallel, and the boundaries are determined by market demand.

2 : How will the advancement of the US Genius Act affect the industry structure? How to weigh the pros and cons?

B ruce : The implementation of the Genius Act marks a new stage in stablecoin regulation, with the core requirement that large issuers must be licensed and maintain 100% USD / US bond reserves, which will increase industry transparency and eliminate risks similar to Silicon Valley banking incidents. Circle that meets the requirements will benefit significantly, and traditional financial institutions are more likely to choose compliant stablecoins such as USDC to expand their institutional user base.

The bill poses a challenge to non-US projects such as USDT. Its lack of transparent reserves and registration qualifications may face the risk of securitization identification, affecting US market operations. The innovative model of decentralized stablecoins may also be hindered. As global regulation becomes stricter, compliant entities will receive development dividends, but may curb innovation vitality and intensify market concentration.

Vava : The core purpose of the United States' regulation of stablecoins through the Genius Act is to maintain the dominance of the US dollar and curb the influence of "on-chain Fed" such as USDT . The bill forces non-U.S. stablecoins to either be compliant or exit the market, allowing US-backed compliance programs such as USDC to receive policy dividends.

As practitioners, we find that stablecoins still need to rely on traditional bank settlement systems to implement, which reveals the contradiction between regulation and innovation: it not only provides compliance paths for innovations such as RWA , but also may limit native chain innovation. This dual effect will continue to affect the mainstreaming process of stablecoins.

Claudio : The core of the Genius Act is to strengthen the payment function positioning of stablecoins, led by the US Currency Regulatory Agency to incorporate it into the existing banking regulatory framework. The long-term compliance Circle has become the biggest beneficiary, which is in line with its years of investment.

The bill has a differentiated impact on different stablecoins: payment stablecoins such as USDC receive institutional dividends, while financial algorithm stablecoins such as USDE face compliance obstacles. USDT is at a strategic turning point, and comprehensive compliance will consolidate mainstream markets but may sacrifice gray business. Its adjustment strategy will become an important case for observing the effectiveness of supervision. This division reflects natural market selection rather than regulatory drawbacks.

KiWi : The Genius Act passed full reserves and foreign investment restrictions to clear obstacles for compliance projects such as USDC , but also created conditions for financial giants such as BlackRock to enter.

This clear regulation will trigger a chain reaction of " rule establishment -resource aggregation - competition upgrade " , which means that although Circle enjoys policy dividends in the short term, it will face strong challenges from traditional financial giants in the medium and long term. There are still huge variables in the current market structure, and it is still unknown who will win the final victory.

3 : How will the global stablecoin pattern evolve after Hong Kong passes the stablecoin issuance system? Do users trust more fiat currency stablecoins regulated by the state (such as Hong Kong Hong Kong dollar stablecoin) or market-driven US dollar stablecoin?

Livis : Hong Kong's stablecoin regulation will not shake the market dominance of 95% of the US dollar stablecoin in the short term. History has proved that alternatives such as the euro and gold stablecoins have failed to break through the mature ecosystem established by the US dollar . Including infrastructure such as OTC network and exchange pricing mechanism.

The more realistic strategy of emerging fiat stablecoins is to create incremental value in the existing system rather than directly challenging the dollar stablecoins. Hong Kong can focus on localized services such as cross-border payment optimization to find differentiated space, but to establish an ecosystem independent of the US dollar, both user habits and infrastructure face huge migration costs. Market choice is always more decisive than regulatory intentions.

Claudia : Although the Hong Kong stablecoin bill is difficult to shake the hegemony of the US dollar stablecoin, it has released a signal to promote the internationalization of the Hong Kong dollar and the RMB, providing practitioners with an important compliance identity.

However, the current regulation mainly regulates the issuance link and lacks specific constraints on the anti-money laundering rules and other aspects of the circulation link. This " recent issuance and light circulation " model makes the network effect of the US dollar stablecoin still dominate the market. The real pattern changes need to be implemented more comprehensive circulation supervision policies.

Ki wi : The development of Hong Kong's stablecoin is subject to the internationalization process of the RMB, not technical factors. Currently, RMB stablecoin mainly serves cross-border settlement of Chinese-funded enterprises, and needs to be deeply integrated with the traditional financial system, making it difficult to implement. It is also difficult to directly migrate to the stablecoin system for traditional use scenarios of offshore RMB.

Although it supports the internationalization of the RMB strategically, in order to make a real breakthrough in the Hong Kong dollar / RMB stablecoin, it still needs to solve real obstacles such as offshore clearing networks and international acceptance. Therefore, Hong Kong's stablecoin layout is more of a hedging strategy than a short-term solution to a replacement for US dollar stablecoins.

Kevin : The strategic positioning of Hong Kong's stablecoin is to provide a test site for the internationalization of China's digital currency, adopting the active model of " regulating first and then developing " to contrast with the passive supervision of the United States. JD.com's upcoming Hong Kong dollar / USD double-pegged stablecoin not only builds application scenarios based on its e-commerce ecosystem, but also seeks breakthroughs within the regulatory framework, reflecting this experimental feature.

This reflects the industry consensus: Ideal stablecoin needs to take into account regulatory recognition and market consensus. As a financial hub connecting China and the international community, Hong Kong's dual attributes help cultivate regional stablecoin benchmarks. Although it is difficult to shake the global status of the US dollar stablecoin in the short term, it may form differentiated advantages in specific markets such as Southeast Asia such as cross-border trade. The ultimate form of stablecoins will be a dynamic balance between regulation and market forces.

Bruce : The dominant position of the US dollar in global payments (47%) , trade financing (83%) and foreign exchange reserves (43%) determines the dominant advantage of the US dollar stablecoin. The Hong Kong dollar stablecoin launched by Hong Kong is subject to the linked exchange rate system (1:7.75-7.85) , and is essentially still dependent on the US dollar system, and may even indirectly strengthen the US dollar status through regional applications such as the Greater Bay Area, because cross-border trade still generally requires US dollar settlement.

On-chain data shows that US dollar stablecoins account for 97% of the trading volume, while Hong Kong dollar stablecoins face the dilemma of insufficient liquidity. Although liquidity can be improved through cooperation with exchanges such as Binance, the global network effect formed by the US dollar constitutes a structural barrier that is difficult to break through. Hong Kong's attempts are more of tactical supplements than strategic reshaping.

VaVa : Hong Kong dollar stablecoins face triple dilemma: the US dollar anchoring mechanism, lack of market consensus and insufficient liquidity, which is similar to the situation where CIPS challenges SWIFT . Even with regulatory support, it will be difficult to change user habits and network effects in the short term. In contrast, USDT is more competitive with its existing ecosystem and has more obvious advantages after compliance transformation.

Changes in U.S. regulatory policies bring new opportunities. Although the Genius Act rejects the clause for technology companies to issue stablecoins, if American technology giants (such as PayPal , etc.) choose to establish a compliance system in Hong Kong, similar to Tesla's factory setting up a factory in China, it may create new competitive variables for the Eastern market. Only this fundamental change, rather than gradual improvement, can truly challenge the dominance of the dollar stablecoin.

4 : How is the actual implementation of stablecoins on-chain payment scenarios? Can applications such as PayFi break through existing limitations? What is the key driving force for breaking the circle next?

Kevin : The development of stablecoin payment has entered a critical period. Although the on-chain transaction volume has exceeded the sum of Visa and Mastercard , the application of daily consumption scenarios is still limited. Applications such as PayFi have shown great potential, but achieving scale implementation requires building a complete business ecosystem.

Taking FlexNet as an example, by connecting issuers, payment channels and business scenarios, stablecoins are embedded into actual transactions, and at the same time, using US Treasury yields to add value to precipitated funds, forming a unique advantage of " payment + income " . In the future, with more licensed institutions joining and scenario expansion, cross-border e-commerce, cross-border remittance and other fields may be the first to make breakthroughs. The real explosion point is to find killer applications that meet both merchant efficiency and user benefits.

Levis : PayFi has shown a differentiated development trend around the world, especially in areas with weak financial infrastructure. Take Venezuela as an example, local users have begun to use stablecoin payment digital services to subscribe, which reflects that 1.4 billion unbanked people are building alternative financial channels through stablecoins. The current PayFi ecosystem is developing diversifiedly, including innovative models such as cross-border bill collection and on-chain foreign exchange exchange. It is worth noting that in areas with severe inflation, the combination of "stablecoin payment + RWA income" ( 7-10% annualized) shows unique advantages.

With the pressure of depreciation of fiat currencies brought about by the surge in global debt ( $ 12 trillion in growth over the past five years ), this development model based on actual demand is more sustainable than regulatory push, and is likely to be a key turning point in the popularity of stablecoin payments.

Claudio : Stablecoin payments show unique advantages in cross-border payments and financially underdeveloped regions. On the one hand, it is breaking through the efficiency bottleneck of traditional cross-border payment systems such as Swift; on the other hand, in countries with severe inflation, such as Venezuela, it has become an important channel for residents to obtain US dollar assets.

However, in markets with mature payment systems (such as China's Alipay), stablecoins are difficult to replace existing local payment methods. Therefore, cross-border payments of enterprises and personal remittances in specific regions have become the most promising breakthroughs. The entry of large technology companies may become the key to promoting popularity. They have both ready-made user scenarios and can also enhance the credibility of stablecoins through corporate credit. This " application scenario + credit endorsement " model has more market breakthrough power than pure technological innovation.

5 : Under the trend of stablecoin financial infrastructure, what kind of competitive relationship will traditional banks and compliant stablecoin issuers (such as Circle ) show? Is it possible to give birth to a new form of " digital banking " ?

Claudio : Stablecoins are being upgraded to financial infrastructure, reshaping the relationship between banks and issuers. Circle 's cross-chain clearing and merchant service modules challenge bank intermediary services and realize " de-mediation " . The relationship between the two parties may go through three stages: short-term cooperation (bank access to USDC liquidity pool), medium-term competition (bank self-built stablecoins), and final mergers and acquisitions (bank acquisition of stablecoin technology). This will give birth to " hybrid banks " that combines DeFi efficiency with traditional compliance to reshape banking business through algorithmic management and smart contracts.

Industry mergers and acquisitions confirm this trend: Visa's investment in BBNK , Stripe's acquisition of Bridge and other cases show that traditional finance and Web3 payment are two-way integration. Circle Payment Network targets SWIFT pain points and realizes global flow of funds through on-chain settlement. Compared with the multi-country fund pool model such as Airwallex , USDC on-chain transfer + fiat currency withdrawal not only avoids fragmentation of funds but also maintains compliance, and has the advantage of structural substitution.

Bruce : Compliant stablecoin issuers such as Circle are spawning a new digital banking model that focuses on payment and clearing infrastructure rather than traditional deposit and loan business. Development has three major characteristics: complementary cooperation with traditional banks, faces competition from large institutions to build their own systems, and may be subverted by decentralized projects.

This will reshape the industry structure and form a three-layer competitive structure of "traditional bank - compliant stablecoin - decentralized protocol", and all parties will engage in game in dimensions such as supervision, technology and users, and promote the digital transformation of financial infrastructure.