Circle’s recent IPO was supposed to be a victory lap for the company behind USDC, one of the world’s leading stablecoins. Instead, it sparked controversy and disappointment among the crypto-native partners who had stood by Circle through thick and thin, especially during the banking crisis of 2023 when USDC briefly lost its peg. These early supporters, who placed massive $10 million orders for Circle’s IPO shares, were shocked to receive allocations as tiny as $135,000. The message was clear: Wall Street and traditional finance were now the priority, even if it meant sidelining the very people who helped Circle survive its toughest moments. This decision did not go unnoticed. Arca, a major backer, publicly criticized Circle for turning its back on the community that had built it up, announcing it would dump all its Circle shares and stop using USDC altogether.
The fallout has been swift and measurable. While USDC’s market cap has soared to $60 billion, matching its circulating supply and proving its technical and regulatory strength, the stablecoin is now seeing outflows from some of its biggest and most loyal institutional users. These partners are moving their money to competitors like Tether, which now dominates the stablecoin market with nearly 80 percent of liquidity. Even though Circle’s infrastructure and compliance are top-notch, it turns out that trust and relationships matter just as much as technology in the world of stablecoins. The crypto ecosystem thrives on loyalty and network effects, and when those bonds are broken, capital can move elsewhere in an instant.
Looking at the bigger picture, the stablecoin market is expected to explode to over $3.7 trillion in the coming years, so there is plenty of room for multiple winners. Circle’s regulatory edge and technical prowess will keep it in the game, but the recent drama serves as a warning: in crypto, loyalty is currency, and losing it can be costly. As Circle courts Wall Street and mainstream finance, it must also find a way to rebuild trust with its original supporters if it wants to remain a leader in the rapidly evolving world of digital money.
