Circle wins bank charter as Allaire predicts $1 trillion stablecoin shift

Stablecoins are moving beyond crypto trading to become invisible payment rails in the global financial system.

Circle won a US national digital currency bank charter on July 10, and CEO Jeremy Allaire said stablecoins will soon operate invisibly behind everyday payments — a shift he forecasts will grow the market from $257 billion to several trillion dollars.

"Stablecoins were built for crypto exchanges. That era is ending," Allaire said in a CNBC interview. "It's now becoming a market for payments. It's now penetrating capital markets with major capital markets firms."

Circle's First National Digital Currency Bank — the first digital asset bank the OCC has ever chartered — provides regulated infrastructure for institutions to treat USDC as digital cash. The charter arrives as USDC's $73 billion market cap trails Tether's USDT at $184 billion, per DefiLlama data. Reserve interest generated 94% of Circle's $694 million first-quarter revenue, a concentration the company is trying to reduce through its Arc blockchain platform.

Analysts project the stablecoin market could reach $1 trillion to several trillion dollars in coming years, Allaire said. The timeline depends on the GENIUS Act, the US stablecoin law signed in July 2025, which takes full effect by Jan. 18, 2027 — giving issuers and banks roughly six months to build compliant infrastructure.

Circle's Arc bet and the Tether gap

Circle is building a four-layer financial stack around Arc, its new blockchain that settles transactions in under a second. More than 100 firms, including Goldman Sachs, Mastercard and Visa, joined the Arc testnet after its October 2025 launch, processing roughly 15 million transactions in the week ending July 15. The company raised $222 million in an ARC token presale at a $3 billion valuation, with BlackRock, a16z crypto and ARK Invest participating.

The push to diversify comes as Tether's USDT dominates crypto trading with a roughly $184 billion market cap and $48 billion in daily turnover — four times USDC's volume, per CoinGecko data. USDC's market cap has slipped from $77 billion since the end of March. Traders still remember USDC de-pegging to $0.88 in March 2023 after $3.3 billion of its reserves sat frozen at Silicon Valley Bank.

USDC handled 63% of stablecoin transaction volume in the first quarter, per Visa Onchain Analytics data cited in Circle's results. But Circle shares have fallen roughly 76% from their post-IPO peak.

Rivals are not waiting

Augustus, a startup building the Global Dollar Bank, raised $180 million in a Series B round at a $1 billion valuation on July 21, led by Tiger Global. The company received conditional OCC approval for a national bank charter in May, offering direct dollar access to international fintechs and banks — competing with Circle's vision of stablecoin-based dollar distribution.

Europe is testing a digital euro, and a new consortium coin is squeezing USDC yields. If banks stall past the January 2027 GENIUS Act deadline, Allaire's invisible stablecoin future may remain a crypto product a while longer.

"Every major institution, every major bank, every capital markets firm, payments companies, enterprises, public companies can all now build on this infrastructure, treat it as digital cash in the economic system," Allaire said.

This article is for informational purposes only and does not constitute investment advice.