Circle Stock Dips 25% from Peak Amid BIS Criticism of Stablecoins

Circle (CRCL), the issuer of USDC stablecoin, saw its stock plummet 15% on Tuesday, marking a 25% retreat from its all-time high of $299 reached just a day earlier. Despite the sharp decline, shares remain up over 600% since the company's IPO earlier this month. Analysts are questioning Circle's valuation as Ark Invest unloads more than $300 million in shares.

The sell-off coincided with a damning assessment from the Bank for International Settlements (BIS), which warned stablecoins "fall short as sound money." The BIS highlighted risks to financial stability and monetary sovereignty, citing potential liquidity issues and inadequate safeguards against financial crime. It instead advocated for tokenizing traditional financial instruments as a more secure path forward.

USDC maintains its position as the second-largest stablecoin with a $61 billion supply, trailing only Tether's $156 billion USDT. The BIS remarks suggest growing institutional skepticism even as stablecoins cement their role in crypto markets.