Circle: Why do 95% of stablecoins eventually go to zero?

Original title: The Stablecoin Trap: Issuing a Stablecoin Without the Infrastructure to Run One

Original author: Kash Razzaghi, Circle

Compiled by: Peggy, BlockBeats

Editor's Note: With clearer regulations and institutional participation, stablecoins are evolving from a technological tool into a critical financial infrastructure. This article points out that issuing stablecoins is not simply a technological choice, but a long-term strategy concerning trust, liquidity, and compliance. Most projects fail before scaling, and the market is naturally converging on a few mature networks. For most businesses, the real question is not "whether to issue a token," but "how to effectively use stablecoins to create growth opportunities for their businesses."

The following is the original text:

In recent months, I've had a series of familiar conversations with executives from some of the world's largest companies. They've expressed strong interest in stablecoins that can move almost instantly across borders, such as digital versions of the US dollar and euro like USDC and EURC. Many of them are also considering: should we issue our own stablecoin?

This impulse is understandable. The market already possesses genuine scale and sustained growth momentum. The total market capitalization of stablecoins is projected to grow from approximately $205 billion on January 1, 2025, to over $300 billion by December 31, 2025. USDC, issued by Circle, remains one of the core assets in this category, closing the year with a market capitalization exceeding $75 billion.

But before actually entering the market, every company should ask itself a question: Do you just want to use stablecoins for your business, or do you intend to actually enter the business of "issuing stablecoins"?

This is not a technical issue, but a strategic one: Is issuing currency a core part of your business model?

Relatively speaking, creating a stablecoin on a blockchain is actually the easiest part. Essentially, it's just a software engineering exercise: writing and deploying a blockchain-based token contract. With an engineering team, or in some cases, with the help of white-label partners, a token can be launched in a fairly short time. But once the product is officially running, operating a stablecoin means supporting a financial infrastructure that operates 24/7.

Operating a trustworthy, regulated stablecoin that meets the expectations of institutions, regulators, and millions of users requires real-time reserve management across different market cycles, daily reconciliation with multiple banking partners, independent audits, and compliance and regulatory reporting in multiple jurisdictions. This necessitates building a 24/7 compliance, risk control, funds management, and liquidity operation system with clear escalation and handling mechanisms under stress and zero tolerance for errors. These capabilities cannot be outsourced once and then neglected; as the scale increases, their costs, complexity, and reputational risks accumulate and amplify.

From a systemic perspective, every new, closed-loop, proprietary stablecoin further fragments liquidity and trust. Each issuer is redundantly building reserves, compliance systems, and redemption channels, ultimately weakening the overall depth and resilience that stablecoins rely on during periods of stress. In contrast, integrating with USDC allows liquidity, standards, and operational capabilities to be consolidated into a widely adopted unified network from day one.

For corporate executives evaluating this decision, the differences between these two paths become particularly clear when viewed from an operational perspective:

The temptation of taking shortcuts

Currently, a large number of new entrants, from fintech companies and payment institutions to crypto projects, are exploring or launching their own stablecoins. The growth of the stablecoin market in 2025 reflects both the gradual clarification of the regulatory environment and the rising interest of institutional investors. However, the reality is that despite the launch of hundreds of stablecoin projects, approximately 95% have never truly achieved a sustainable, global scale.

Some believe that the same economic returns can be replicated without incurring heavy operating costs. However, reality is far less romantic. Whether you issue stablecoins yourself or through white-label services, you've entered an industry where trust, liquidity, and scale are the lifeblood of success.

Sometimes, the cost of mistakes can be measured in trillions. Earlier this year, media reports indicated that an issuer accidentally minted $300 trillion worth of tokens due to an operational error. Although the error was fixed within minutes, it was enough to make headlines. On another occasion, a well-known stablecoin briefly de-pegged during a period of severe market volatility, again illustrating that even small infrastructure flaws can be amplified and cascaded under pressure.

These events serve as a reminder that the sustainability of stablecoins depends on their operational rigor under pressure. Market participants and policymakers are watching closely.

Trust is the true network effect.

Anyone can create a token on the blockchain. In fact, there are already thousands—most minted within minutes and forgotten just as quickly. Even in the niche market of stablecoins, with over 300 projects launched, only a tiny fraction truly carry almost all of the real-world usage and value; and the vast majority, about 95%, never truly succeed.

The difference lies not in technology, but in scale and trust. The real challenge for stablecoins begins in the expansion phase: how to maintain liquidity, redemption capacity, compliance, and system availability as trading volume grows in different markets and cycles.

You can mint a token in minutes, but you can't mint trust in minutes. Trust comes from transparency, scale, and consistent redeemability across market cycles, and accumulates over time. This is why the stablecoin market ultimately concentrates in the hands of a few issuers—and why USDC's historical cumulative settlement volume has exceeded $60 trillion as of January 30, 2026.

Instead of reinventing the wheel, choose cooperation.

For most businesses, the right question isn't "How do we issue our own stablecoin?", but rather "How do we integrate stablecoins into our business to unlock new growth?"

With the help of USDC and EURC, businesses can today embed digital dollars and euros to gain near-instant settlement, global coverage, and interoperability across dozens of blockchains, without having to bear the complexities of reserve management and regulatory compliance themselves.

Let's write the next chapter together.

The stablecoin industry is entering a new phase. Policymakers are developing clearer rules, institutions are raising their own standards, and the market is gradually converging on a simple consensus: trust, liquidity, and compliance are the true moats.

The goal is not to have more stablecoins, but to have fewer but better stablecoins—capable of responding to current needs with shared liquidity, transparent reserves, and proven performance across cycles.

For institutions developing stablecoin strategies, the first step shouldn't be deciding "what to create," but rather "who to create it with." If you want stablecoins to empower your business but don't want to be the issuer, then the time-tested choice is clear: talk to Circle and use USDC.