Circle’s Stock Retreats 15% as BIS Casts Doubt on Stablecoin Viability

Circle's (CRCL) high-flying shares tumbled 15% on Tuesday, extending a retreat from Monday's record high of $299. The stablecoin issuer's stock now sits 25% below its peak, though remains up over 600% since its IPO earlier this month.

The pullback follows sustained selling by Ark Invest, which has offloaded more than $300 million worth of shares since the offering. Analysts had flagged the stock's premium valuation relative to peers even before this week's decline.

Market jitters coincided with a stark warning from the Bank for International Settlements. The central bank umbrella group declared stablecoins fundamentally flawed as money, citing their inability to maintain parity with sovereign currencies, liquidity risks during stress events, and inadequate financial crime controls.

Instead of private stablecoins, the BIS advocated for tokenizing traditional assets like central bank reserves and government bonds as the next evolutionary phase for digital finance. The institution conceded stablecoins might eventually find a niche role - but only under stringent regulation.