Big Banks Circle USDC Like Vultures—Here’s Why the Stablecoin Titan Could Topple

Wall Street’s old guard sharpens its knives as the $30B stablecoin empire faces a five-pronged threat.

1. Regulatory ambush: The OCC’s new ’stablecoin oversight framework’ puts a bullseye on Circle’s back—just as JPMorgan quietly files patents for its own Fed-approved digital dollar.

2. Liquidity warfare: BlackRock’s tokenized treasury ETFs now offer 5.4% yields, draining USDC reserves faster than a crypto hedge fund blowing margin.

3. The Tether trap: While Circle plays compliance nice guy, USDT’s 72% market share proves criminals and speculators still call the shots.

4. Banking betrayal: When Signature collapsed, Circle lost its $3.3B lifeline. Now Citi and BofA won’t return their calls—coincidence or conspiracy?

5. The CBDC endgame: The Fed’s ’Project Hamilton’ test runs hit 1.7M TPS last quarter. When real digital dollars arrive, will anyone need middlemen?

Circle’s CEO insists ’partnerships are coming’—but in finance, ’partnership’ usually means ’hostile takeover dressed in a press release.’

TLDR

• Circle’s USDC faces mounting pressure as major Wall Street banks plan a joint stablecoin initiative.
• The GENIUS Act is advancing in the U.S. Senate and could give banks a regulatory path to issue stablecoins.
• Banks like JPMorgan Chase and Citigroup aim to use stablecoins for faster and cheaper cross-border payments.
• Circle reportedly talks with Ripple and Coinbase about a potential acquisition or partnership.
• Arthur Hayes believes the bank-led stablecoin project poses a serious threat to Circle’s dominance in the market.

Circle faces rising pressure as major Wall Street banks consider launching a unified stablecoin initiative. Traditional financial institutions prepare to challenge existing players as the GENIUS Act gains momentum in the U.S. Senate. Circle’s position in the digital dollar market may weaken if banks proceed with this collaborative effort.

Circle Faces Pressure from Banking Giants

Wells Fargo, JPMorgan Chase, Citigroup, and Bank of America are reportedly evaluating a shared stablecoin project. The effort aligns with the GENIUS Act, which sets rules for banks and nonbanks to issue stablecoins. Banks aim to use stablecoins for faster and more efficient payments, especially in international transactions.

This project remains in early planning stages, but bank interest signals a strategic pivot toward blockchain-based finance. The stablecoin market’s profitability has caught their attention, especially as big tech and retail expand. With this shift, Circle could face a significant decline in dominance if banks execute their plans effectively.

The GENIUS Act could fast-track this transition by offering banks the legal framework to launch digital dollar products. Commercial banks, seeing future value in stablecoins, are moving from opposition to competition. Circle’s market share may shrink if institutional alternatives enter with better capital and regulatory clarity.

USDC Peg Slips Amid Regulatory Shifts and Sale Talks

Circle’s USDC slipped slightly from its dollar peg, trading at $0.9987 amid broader market uncertainty. This drop followed news of banks developing their stablecoin infrastructure in response to potential legislative changes. Market participants interpreted the MOVE as a signal of shifting confidence in Circle’s ability to hold market ground.

At the same time, Circle is reportedly in talks with Coinbase and Ripple regarding a potential acquisition or merger. Observers suggest the move targets Circle’s strong user base, deep liquidity, and extensive on-chain integrations. The company recently launched its Circle Payments Mainnet, aiming to compete directly with Ripple’s network.

Although the launch represents Circle’s efforts to innovate, concerns grow around its long-term position in decentralized finance. Circle could lose Core use cases across DeFi platforms if banks launch a superior, compliant stablecoin. Therefore, the company must adapt swiftly or risk falling behind institutional entrants.

Arthur Hayes Flags Threat to Circle From Bank-Led Competition

Arthur Hayes described the new bank-led stablecoin as a direct threat to Circle and its USDC product. He emphasized these institutions’ scale and capital strength in the stablecoin space. Banks have a longstanding infrastructure and trust with regulators and clients, unlike startups.

This initiative marks a strategic reversal, as banks once dismissed stablecoins but now seek to lead in their deployment. Once backed by these same banks during IPO planning stages, Circle may now face them as rivals. Analysts believe banks aim to capture the full margin from digital dollars instead of facilitating others.

Despite the early development phase, sentiment within the crypto community reflects rising concern about Circle’s market sustainability. The GENIUS Act allows banks to reshape stablecoin dynamics, possibly sidelining current leaders. As competition intensifies, Circle must now defend its network, liquidity, and DeFi integration.