Circle raises fees despite rising stablecoin market competition

FOR the second time in less than a year, Circle Internet Financial has increased the fees it charges to cash out holdings of its USDC stablecoin.

Redemption of USDC via the Circle Mint platform used to be free and unlimited. In February, Circle introduced a fee for swaps above US$15 million. Now, there are additional fees applicable to users seeking near-instant redemption of USDC if the value exceeds more than US$2 million a day. Those fees start at 0.03 per cent per transaction at that threshold, and increase in tranches to as much as 0.1 per cent for redemptions above US$15 million.

“Circle Mint redemption options support the availability of instant liquidity globally – similar to banks and other financial institutions that charge for speed and service,” a Circle spokesperson said.

Traders can opt to redeem USDC for free if they are willing to wait as many as two days to receive their cash. Circle introduced the new tiered fee structure in late September, according to a source familiar with the matter who asked not to be named sharing private information. Clients have expressed concern to Circle that the rising fees make USDC less appealing to use for trades, the source said.

Competition among stablecoins has ramped up this year, as new issuers flood the market and traditional financial entities such as BlackRock seek ways to increase usage of their own tokens as collateral.

Circle has also struggled to keep pace with the growth of its much larger rival. Tether Holdings’s USDT token, which makes up about 70 per cent of the stablecoin market, hit a record high of US$120.6 billion in circulation this month. Tether charges a fee of 0.1 per cent to mint or redeem more than US$100,000 in USDT with the issuer, according to its website.

Circle continues to pursue plans for a stock-market listing of its shares, its chief executive officer Jeremy Allaire said this month, after confidentially filing a draft registration with the Securities and Exchange Commission in January. The company previously attempted to go public via a merger with a blank-check firm; that deal was scrapped in 2022.

Circle’s shares traded this month on secondary markets at a valuation of around US$4.5 billion, according to data from Bulletin. That’s about a 42 per cent decline from its US$7.7 billion price tag in 2022, Bulletin data showed, when it raised around US$400 million from investors including BlackRock and Marshall Wace. BLOOMBERG