Intense Competition in Stablecoins Circle Adjusts USDC LargeScale Exchange Fees Again
Facing the fiercely competitive stablecoin market, digital dollar USDC issuer Circle has once again raised the large redemption fees for USDC within less than a year, primarily affecting institutional investors and large traders. Circle stated that this move is to address liquidity demands, but it has also raised concerns among users.
Fees for rapid exchanges over $2 million begin
According to Bloomberg, Circle Mint’s service for converting USDC to dollars was previously free with no limits on the exchange amount. However, as of February this year, they began charging fees for conversions over $15 million. At the end of September, Circle introduced a new tiered fee structure, which starts charging a 0.03% fee for rapid exchanges exceeding $2 million, with a maximum fee of 0.1% for exchanges over $15 million. Circle indicated that this fee structure is intended to meet global liquidity demands, similar to the fees charged by financial institutions such as banks for expedited services. Traders who are not in a hurry can opt to wait two additional days to receive fee-free exchanges.
Intense competition in the stablecoin market; mixed responses from Circle customers
According to Bloomberg citing informed sources, some Circle customers are concerned that the increase in fees will diminish the trading attractiveness of USDC. In contrast, USDC’s biggest competitor, the stablecoin issuer Tether, has seen its stablecoin USDT reach a record circulation of $123 billion this year, while Tether only charges a 0.1% fee for USDT minting or exchanges over $100,000.
In summary, if Circle cannot offer fee reductions or incentives to attract more large institutional users, it is likely to further lose market share. Additionally, other stablecoin issuers may seize the opportunity to join in, sharing the lucrative stablecoin market.
(Bernstein: Stablecoin market cap hits new highs, becoming “systemically important”)
