Circle increases the redemption fees of USDC

Circle, società statunitense incaricata di gestire l’emissione di USDC, ha appena annunciato una modifica delle commissioni per il redeem della stablecoin.

From now on, all cash-outs with a countervalue exceeding 2 million dollars will be subject to a fee ranging from 0.03% to 0.1%.

This change is primarily aimed at institutional investors and large holders of USDC.

Circle modifies the USDC fee policy: from 0.03% up to 0.1% for institutional investors

According to the latest crypto news, the technology company Circle has just increased the redemption fees for USDC.

The decision affects only those users who make transactions of redeem of the stablecoin through the Circle Mint platform for more than 2 million dollars.

For those who do not know, the redeem is the practice where the cryptographic resource is returned to the issuer (which is burned) in exchange for fiat dollars.

From now on, the fees for this practice will range from a minimum of 0.03% up to a maximum of 0.1% on the larger cash-out.

It is the second time in a year that Circle changes its refund conditions: in February it had introduced costs for refunds exceeding 15 million dollars.

Traders can still redeem USDC without fees if they are willing to wait up to two days for the money transfer. 

This increase in fees mainly concerns institutional investors who need to execute redemptions in fiat periodically.

For a redeem of 15 million USDC, one might end up paying up to 15,000 dollars, an exorbitant amount considering that other competitor services are almost free.

As reported by anonymous sources, the revision seeks to bring more liquidity into Circle’s coffers, trying to leverage the increase in institutional participation.

We also remember how Circle positioned itself for an initial public offering (IPO)  and the listing on the US exchanges by 2025.

The entry into Wall Street could attract capital from various large companies, which will have to pay a commission to Circle to use its stablecoin services.

The fintech company filed for an IPO in January, awaiting approval from the US Securities and Exchange Commission (SEC).

Circle’s fees remain affordable for small users

While for institutional clients the fees imposed by Circle are starting to become detrimental, small traders can still take advantage of the cost-effectiveness of USDC.

The stablecoin can indeed be exchanged for free on-chain from one address to another, with only the cost of gas fees depending on the blockchain it belongs to.

On layer-2 networks, sometimes transaction fees are just a few cents.

For deposits on CEX, the fees align with those of other stablecoins and rarely exceed 2-3 dollars, regardless of the amount.

For redeem on Circle Mint, transactions below 2 million dollars remain inexpensive, highlighting an increase dedicated exclusively to financial institutions.

In all this, small users can also take advantage of the scalable aspect of USDC on some chains like Sui, where exchanges occur in a few seconds.

The user “Bigfloater74” took just 2 seconds to transfer the on-chain resource from Coinbase to their wallet.

We also remember how within the Circle community, there are some merchants who accept payments in USDC at zero commission for free.

According to the website acceptusdc.com, global adoption for the stablecoin is improving significantly.

More and more small shopkeepers are starting to accept payment in crypto, without customers having to spend money on fees for the transfer of funds.

All exchanges are also processed 24/7, without particular waiting times unless there are technical issues on the reference blockchain.

It is clear that USDC remains a very valid option for retail, while it becomes an almost obligatory choice for institutions given the compliance with the regulations.

Dominance of the stablecoin market: USDC in second place behind USDT

Despite the increase in Circle’s fees for large cash-outs, USDC does not seem to have recorded losses of its share in the stablecoin market.

The competitive scenario has remained unchanged for some months now, and the latest news has not led to a sell-off in favor of other more economical options.

USDC remains second in the ranking of the largest stablecoins, with a market share of about 20% and a capitalization of 34.5 billion dollars.

In first place there is obviously USDT, which with 120.3 billion dollars and a dominance of 69.7% is the most frequented in the entire blockchain arena.

Together, USDC and USDT dominate the stablecoin market, capturing almost 90% of all the value within it.

DAI, USDe, and FSUSD close the top 5 with a minority share but with entirely respectable and envied values by other competitors.

In total, the market cap of all stablecoins in circulation, both over-collateralized and algorithmic, amounts to 172.6 billion dollars.

Since the beginning of 2024, USDC has increased its dominance share by 1.5%.

Regarding the volumes and transactions in USDC, the scenario appears to have changed significantly since the beginning of the year. 

Networks like Base, Arbitrum, and Polygon have seen their activities around Circle’s stablecoin increase significantly.

On the contrary, on Avalanche and Ethereum there has been a strong reduction in operations, with these networks favoring the competitor USDT.