Circle launched USDC, expanding through channels and CCTP, and introduced the public chain Arc to attract institutions.

Written by: Conflux

Stablecoins are not a field where everyone has a chance. According to statistics from ARK Invest analyst Lorenzo Valente, stablecoins with a market capitalization of over $1 billion only increased from single digits to 12 in four years; those with a market capitalization over $10 billion peaked at 4 in 2022, and now only Tether and Circle remain. As the threshold rises, the number of players drops dramatically, which is a characteristic feature of network effect assets: whether exchanges, payment networks, and DeFi protocols are willing to connect depends on whether the scale is already large enough.

This series aims to track: who is holding the thresholds already occupied, who is trying to break the rules and climb higher, and in which direction regulation and capital are pushing this competition.

On September 16, Circle's institution-level Layer 1 public chain Arc officially launched its public mainnet—this chain is aimed at payments, foreign exchange settlement, and asset tokenization, using USDC as the native Gas token, with 11 institutions including BlackRock, Visa, and Mastercard serving as founding validators. To understand what problem this chain aims to solve, one must first recognize the position of USDC, which has been in circulation for almost eight years, in the stablecoin market.

The Night of Depegging

USDC was born in 2018, launched by the CENTRE alliance co-founded by Circle and Coinbase. Circle's official positioning has been clear from day one: to create a dollar token emphasizing regulatory compliance and reserve transparency, in contrast to the leading USDT, which faced ongoing questions about reserve transparency. However, the following years were not easy for it—what the market needed was liquidity depth, not compliance certificates, and USDT's first-mover scale advantage relegated USDC to a long-term "alternative option."

Circle's first attempt to enter the capital markets was in 2021, planning to go public via a SPAC (Special Purpose Acquisition Company), but ended in failure by the end of 2022. In March 2023, Silicon Valley Bank collapsed, and about $3.3 billion of Circle's reserve funds were temporarily trapped in the failed bank, causing USDC to briefly depeg and fall to around $0.87. That crisis laid bare the most fatal weakness of a stablecoin company—it’s credit hinges on the safety of the traditional banking system.

Delayed Bell Ringing

After completing that lesson, Circle spent two years recasting itself as a model of "compliance narrative." On June 5, 2025, Circle listed on the New York Stock Exchange (stock code CRCL), becoming the first major stablecoin issuer to successfully complete an IPO. The issue price was set at $31, with an initial issuance of 34 million shares, corresponding to a total issuance scale of approximately $1.05 billion; a week later, underwriters fully exercised the green shoe option, expanding the total issuance scale to around $1.2 billion. Most of this money flowed to existing shareholders—Circle issued 14.8 million shares in the initial issue, and early shareholders sold 19.2 million shares; with the full exercise of the green shoe option, Circle's total issuance reached about 19.9 million shares, with a net income of about $583 million after deducting underwriting fees. On the first day of trading, it rose by 122.58%, closing up 168.5%, with a market capitalization exceeding $18 billion; the next day, the stock price hit $119; less than three weeks later, on June 23, the price briefly hit a historic high of $298.99, before dropping nearly 40% in the following four trading days. This was one of the highest first-day gains among IPOs over $1 billion in the United States in recent decades.

The prospectus disclosed: as of April 2025, the circulation of USDC was approximately $60.1 billion, accounting for about 29% of the stablecoin market, while USDT's share at that time was about 61%. In 2024, Circle's total revenue was $1.676 billion, with 99% coming from interest income on reserve assets, often compared to a "narrow bank": it does not lend but invests the USDC it collects into short-term U.S. Treasuries to earn spread. The bulk of this business goes to distribution channels—this is one of the highest first-day gain cases among IPOs over $1 billion in recent decades. In 2024, Circle paid Coinbase about $908 million for this, accounting for about 54% of annual total revenue.

Market Share is Bought

The IPO tells a capital story, but what truly determines whether USDC can catch up to USDT is a battle for channels. Binance is the most direct example: after both sides reached a strategic cooperation in December 2024, Binance promised to hold at least $3 billion of its own Treasury's USDC, and Circle also paid Binance about $60.25 million as an upfront fee, setting up continuous incentives linked to USDC balances. This is not a natural spillover of network effects but a channel agreement bought with real money.

Beyond channels, Circle's more fundamental step is the official cross-chain protocol CCTP (Cross-Chain Transfer Protocol). It adopts a "burn-mint" mechanism: users burn USDC on the source chain, and Circle mints native USDC on the target chain at a 1:1 ratio, with all USDC on supported networks being officially issued by Circle, and no Wrapped Token exists. With CCTP, USDC has achieved native deployment on over 20 public chains, avoiding the old problem of "each chain having independent issuance and liquidity being split" like USDT; Tether later introduced USDT0 to solve the same issue but took a different route with LayerZero's lock-mint mechanism.

This is also a problem that Arc and its sister product—the institution-oriented cross-border payment network Circle Payments Network (CPN)—aim to solve. Simply issuing coins won't allow USDC to catch up with USDT's decade-long scale inertia; thus, it changes the battlefield: turning institutions like BlackRock, Visa, and Mastercard into founding validators for Arc, letting them directly participate in transaction validation and network security maintenance, rather than just a customer relationship at the asset level. In May 2026, Arc completed its private placement for its native token, raising $222 million, with a fully diluted network valuation of $3 billion, led by a16z, and participated by BlackRock, Apollo, and Intercontinental Exchange, making Circle the first publicly traded company to conduct a token private placement after listing. This batch of tokens is currently only available to institutions, comes with several years of lock-up, and public distribution has not yet occurred; governance voting and staking features will only be officially enabled after the network shifts to proof-of-stake (PoS).

Premium Not Yet Priced

USDC's annual growth rate has outpaced USDT for two consecutive years: in 2024, USDC grew by 77%, while USDT grew by 50%; in 2025, USDC grew by 73% to $75.1 billion, and USDT grew by 36% to $186.6 billion. However, growing faster doesn't mean catching up—USDC's scale is still less than half of USDT. As we enter 2026, this momentum is also slowing: in the second quarter, USDC's circulation growth rate year-on-year dropped to 19%, with a scale around $73.3 billion; on the day of the fourth-quarter 2025 financial report announcement, Circle's stock price jumped nearly 30%, buoyed by a combined revenue and reserve income of $770 million which exceeded expectations, rather than sheer scale expansion. The pricing logic offered by the capital market is also very straightforward: Circle's current valuation is not simply priced according to traditional banking profit frameworks but includes expectations for USDC growth, CPN, and Arc, among other businesses. At the end of March, the market heard that the new version of the CLARITY Act draft might prohibit stablecoins from earning interest on shared divisions, causing CRCL to drop in response—regulatory winds could potentially re-price this valuation logic at any time. On September 17, Circle's stock closed at $85.09, with a market cap of about $21.6 billion, having dropped over 70% from its historical high of $298.99 in June 2025.

Arc was officially opened to the public on September 16, and platforms issuing tokens such as Tolly, ArcPad, and Flipt, which were already active during the private mainnet phase, were subsequently opened up to everyone, with USDC once trading at a 1.8x premium before launch. The industry compares this launch with Robinhood Chain—where the latter relied on retail flow to make a new public chain one of the fastest-growing on-chain ecosystems in 2026, while Arc brings USDC liquidity, financial institutions, and an existing infrastructure stack. On September 16, CRCL dropped about 6.8%. The day before, a procedural vote in the U.S. Senate failed to advance the CLARITY Act; that day, the Federal Reserve announced a 25 basis point interest rate increase. The weakening regulatory expectations combined with changes in the interest rate environment became two crucial factors affecting market sentiment at that time. Whether the names of BlackRock, Visa, and DTCC can genuinely bring institutional funds and settlement demand onto this chain, or if it will repeat the script of Meme hot money running ahead, will determine not only the fate of this new public chain but also whether USDC's bet on "exchanging compliance for scale" can truly turn a profit.