The Key to Stablecoin Wars Circle Increases USDC Redemption Fees Again Continues Towards IPO Goal

What happened?
Stablecoin issuer Circle has once again raised the redemption fees for its stablecoin USDC, specifically targeting high-value users.
In the competitive stablecoin market, Tether’s USDT, the leader in stablecoins, currently maintains a dominant position with a market share of 70%.
Circle plans to relocate to Wall Street in 2025 and actively promote its initial public offering (IPO).
Circle adjusts USDC redemption fees, affecting high-value transactions
Stablecoin issuer Circle has announced once again that it will increase 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. However, starting from September this year, Circle began charging fees for transactions that exceed $2 million in daily redemptions. The purpose of adjusting the fees is to meet the high demand for market liquidity.
This new fee model from Circle mainly targets institutional investors and high-frequency traders. The fee rate starts at 0.03% per transaction and can go up to 0.1% for transactions over $15 million. However, users can still avoid fees if they are willing to wait for two days.
A spokesperson for Circle pointed out that this fast redemption service is somewhat similar to the fast transaction fees charged by banks and other financial institutions, reflecting the market’s demand for efficient liquidity.
However, some users believe that the continuously increasing fees may reduce the attractiveness of USDC in future transactions, especially as more and more new stablecoin issuers enter the market this year, intensifying the competition between stablecoins.
Tether maintains market dominance while Circle’s market share declines
Competition in the stablecoin market is becoming increasingly fierce, especially with Tether’s USDT stablecoin maintaining its leadership position.
According to DefiLlama’s data, the current market value of USDT is as high as $120 billion, accounting for nearly 70% of the market, while USDC accounts for less than 20%, with a market value of approximately $34 billion. Although Tether also charges a 0.1% fee for large transactions, it currently only applies to transactions exceeding $100,000.
In addition to the difference in market share, Circle faces challenges in terms of revenue and valuation. According to Bulletin’s 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 has previously attempted to go public through a merger with a blank-check company (SPAC), but ultimately canceled the plan in 2022. Circle has also resubmitted an IPO application to the U.S. Securities and Exchange Commission (SEC) and plans to relocate its headquarters to Wall Street in 2025 to enhance market recognition.
In addition to the United States, Circle is actively expanding the international application scenarios for its stablecoin. In September this year, Circle announced the integration of USDC with the local banking systems in Brazil and Mexico, allowing local businesses to use USDC for instant transactions.
However, despite Circle’s continuous expansion of its business footprint, its market share has significantly declined over the past two years. With traditional financial institutions entering the stablecoin field, such as asset management company BlackRock planning to launch the BUIDL token as collateral for derivative trading, and financial technology company Robinhood exploring the application of stablecoins under the European Union framework, the challenges that Circle will face in the future will become even more severe.
Reference:
bloomberg, cointelegraph