Circle is growing rapidly in the stablecoin race

Foreword

Although U.S. President Donald Trump's tariff policy caused market turmoil and temporarily suspended Circle's listing plan, it is advancing its expected IPO at lightning speed.

Circle is actively deploying in multiple fields - payment networks, banking license applications, institutional cooperation, and is gradually approaching market leader Tether. Taking data as an example, the issuer of USDC has narrowed its market share gap with Tether from 50 percentage points to only 35 percentage points.

In today’s post, we’ll explore:

• USDC accelerates growth, closing the gap with Tether

• How Circle’s new payments network replaces outdated cross-border systems

• Why Circle and other crypto companies are suddenly racing to apply for banking licenses

• How traditional banks are preparing for a counterattack against stablecoins

Let’s first explore why the competition in stablecoins is so important, beyond the cryptocurrency bubble.

The $2 Trillion Stablecoin Race

The competition in stablecoins is heating up. As regulation becomes clearer, traditional financial giants are preparing to take action, which may break the current duopoly of Tether and Circle.

In the past five months, the combined market share of the two major stablecoins has fallen by 4 percentage points.

Ran Goldi, senior vice president of payments at Fireblocks, told Coindesk: "We will see banks issuing stablecoins because they meet MiCA requirements. By the end of this year, you may see more than 50 new stablecoins."

A report from Standard Chartered Bank shows that by the end of 2028, the stablecoin market size may soar to a staggering $2 trillion, almost ten times the current total supply of $235 billion.

Dozens of banks are privately drafting strategic plans for stablecoin initiatives, and most are expected to finalize their plans by the end of this quarter. "It will be interesting to see whether banks develop their own, or use platforms that serve banks like BNY Mellon, or vendors like Fireblocks," Goldi noted.

This looming competitive threat explains why Circle is moving so eagerly in multiple areas. As traditional financial institutions prepare to enter the market, the window to consolidate market position is closing rapidly.

The stablecoin race heats up

USDC's intentions and quick moves are obvious: as of April 19, its market capitalization climbed to more than $60 billion, an increase of $17 billion, or about 40%, from $44 billion at the beginning of the year.

In contrast, Tether's USDT market capitalization grew by only 8% over the same period. Although Tether maintains its dominance with a market capitalization nearly 2.5 times that of USDC, the growth gap is narrowing rapidly.

USDT's market share dominance has fallen by nearly 10 percentage points to 61.85% in the past five months, while Circle's has risen by about 6 percentage points.

Data shows that the preference gap between the two stablecoins is widening. Regulated entities and DeFi protocols prefer USDC because Circle's regulatory system is clear and transparent.

Its advantages are most obvious in Europe. USDC has obtained a license from MiCA, allowing it to cover 27 EU countries and a total population of 450 million. In contrast, USDT does not.

Regulators aren’t the only obstacle to Tether’s continued dominance.

Coinbase CEO Brian Armstrong recently said the exchange’s new “ambitious goal” is to replace Tether’s USDT as the world’s “number one dollar stablecoin.”

Other exchanges, including Kraken and Crypto.com, have also delisted USDT in European markets.

Breaking the Bank Rails

On Tuesday, Circle launched a product designed to reduce the cost and delays of cross-border money transfers. The Circle Payment Network (CPN) aims to use stablecoins as a bridge to dismantle the world’s outdated financial infrastructure.

Circle posted on X: "We are not just building stablecoins, we are also building a modern infrastructure for global payments."

International bank settlements are notoriously slow, costly, and constrained by legacy systems that often close overnight and on weekends. Circle’s alternative promises instant, 24/7 transfers using fully-reserve digital U.S. dollars (USDC) and euros (EURC).

Circle has brought on board more than 20 design partners, including dLocal, WorldRemit, BVNK, Yellow Card, and Coins.ph.

This partner lineup reflects a clear focus on institutions in emerging markets and high-volume remittance corridors — areas where traditional banking is particularly underrepresented.

Circle’s network initiative has a simple, fundamental rationale — to transform stablecoin issuers into critical financial infrastructure providers for moving these assets at scale.

A person familiar with the matter said: "Circle is launching a payment network, initially aimed at remittances, but ultimately aiming to compete with Mastercard and Visa."

Banking layout

Along with the launch of the payment network, Circle is preparing to overcome regulatory difficulties and apply for a US banking charter or license, according to the Wall Street Journal.

However, Circle is not alone. BitGo, the custodian of the Trump family stablecoin USD1, as well as Coinbase and Paxos, are also following the same path. The timing coincides with the continued evolution of US stablecoin regulations, which may soon require stablecoin issuers to obtain a license.

Why pursue a banking license now?

A banking license would allow Circle to operate like a traditional bank, potentially including accepting deposits and making loans.

But it comes with a high cost. Crypto firm Anchorage Digital reportedly spent millions of dollars to comply with regulatory requirements after obtaining a federal charter.

But the rewards could be rich — namely, access to a master account at the Federal Reserve, the holy grail that has eluded crypto-native banks like Custodia for years. Such access would provide Circle with the closest access to the U.S. money supply that a financial institution can get.

Our Take

Circle’s multi-pronged strategy suggests it’s preparing more than just a pre-IPO positioning, but a deeper attempt to bridge the gap between traditional finance and the crypto space, something no other stablecoin issuer has yet successfully crossed.

Circle’s institutional-grade payments network, banking license ambitions, and USDC’s regulated status together create an unprecedented moat against Tether and incoming traditional financial competitors. Circle is laying a solid foundation in diverse areas to build a significant differentiation from competitors.

Of note is Circle’s focus on emerging markets and remittance corridors. While competitors compete for dominance in mature Western markets, Circle is quietly expanding, building infrastructure in regions where financial inclusion remains out of reach.

Its list of partners—dLocal (South America), WorldRemit (Africa and Asia remittances), Yellow Card (Africa), Coins.ph (Philippines)—reads like a roadmap for the next generation of the remittance market.

MiCA’s license advantage over Tether is perhaps Circle’s most underrated asset. Reaching 450 million European users through regulatory compliance is undoubtedly a winner-takes-all situation.

Circle’s strategy shows that they understand a basic fact - winning the stablecoin war depends not only on market share, but also on infrastructure, regulatory positioning and institutional integration.

Circle knows that it cannot surpass Tether’s market value in the short term, so it is building a completely different field that Tether, despite its size, cannot compete with with its existing capabilities.