Circle Stock Dips 25% from Peak Amid BIS Criticism of Stablecoins

Circle (CRCL), the issuer of USDC stablecoin, saw its stock drop 15% on Tuesday, extending a pullback of around 25% from its all-time high of $299 reached on Monday. Despite the decline, shares remain up over 600% from the company's IPO earlier this month. Analysts have raised concerns over Circle's lofty valuation, while Ark Invest has offloaded more than $300 million in shares since the public debut.

Tuesday’s sell-off coincided with fresh scrutiny from the Bank for International Settlements (BIS), which cast doubt on the long-term viability of stablecoins. In a press release, the BIS stated stablecoins "fall short as sound money" and pose risks to financial stability and monetary sovereignty without proper regulation. It warned that stablecoins may not consistently maintain 1:1 parity with fiat currencies and could struggle under stress due to liquidity issues and lack of oversight against financial crime.

The BIS instead backed the tokenization of central bank reserves, commercial bank money, and government securities as a more secure path forward in financial innovation. The institution noted stablecoins might play only a "subsidiary role" in the financial system, despite their current role in crypto access and digital payments.

Still, the stablecoin market is growing rapidly, with USDC alone commanding a $61 billion supply—second only to Tether's $156 billion USDT. Circle recently expanded its reach by launching a global payments and remittance platform, positioning itself to compete with giants like Mastercard and Visa. Visa data shows stablecoins enabled over $4 trillion in transaction volume in the past 30 days, underscoring their growing role in modern finance.