Circle: Why Do 95% of Stablecoins Ultimately Fail?
The article "The Stablecoin Trap: Issuing a Stablecoin Without the Infrastructure to Run One" by Kash Razzaghi of Circle discusses the critical considerations for companies interested in stablecoins. While many executives are drawn to the idea of issuing their own stablecoin due to the market's growth (from $2050B to over $3000B in 2025), the author argues this is a strategic, not just technical, decision.
Creating a stablecoin is relatively simple from an engineering perspective, but operating a trusted, regulated one requires a robust, 24/7 financial infrastructure. This includes real-time reserve management, daily bank reconciliations, independent audits, compliance reporting, and risk management systems. These operational burdens are complex, costly, and amplify reputational risk.
The market has seen hundreds of stablecoin projects, but approximately 95% fail to achieve lasting, global scale. The key differentiator is not technology but trust, built through transparency, consistent redeemability, and proven performance across market cycles. Incidents like accidental trillion-dollar mints or temporary de-peggings highlight the severe consequences of operational flaws.
Instead of building their own, most companies should focus on integrating existing, established stablecoins like USDC or EURC into their businesses. This allows them to benefit from instant settlement, global reach, and interoperability without the immense operational overhead. The industry is converging on the principle that trust, liquidity, and compliance are the true moats, favoring fewer, higher-quality stablecoins with shared liquidity and transparent reserves. The recommended path is to partner with proven providers like Circle rather than attempt to become an issuer.
marsbit02/03 13:17
