Circle’s USDC At Risk Per Arthur Hayes As Big Banks Explore Joint Stablecoin Venture

Major Wall Street banks are reportedly exploring a collaborative stablecoin initiative as the GENIUS Act advances toward passage in the U.S. Senate. Crypto veteran Arthur Hayes sees this as a significant challenge to existing market leaders like Circle (USDC) and Tether (USDT). Reflecting on the development, Hayes remarked, “Bye bye Circle. Thanks for playing.”

Arthur Hayes Bids Bye to Circle, USDC Dollar-Peg Fumbles

The latest WSJ report notes that top Wall Street banking giants like Wells Fargo, Bank of America, JPMorgan Chase, and Citigroup, as evaluating a joint collaboration for a stablecoin project. As the GENIUS Act proceeds to the US Senate vote, commercial banks are already preparing for the next big opportunity in the stablecoin market.

These developments have sent jitters, especially to Circle’s USDC, which saw its dollar-peg fumble a bit, while slipping to $0.9987 earlier today. ETH Store President Nater Geraci pointed out how banks switched from cursing stablecoin by calling crypto a scam, to now working on them.

Crypto veterans like Arthur Hayes believe that the big banks could threaten USDC’s existence with the stablecoin project. Interestingly, this development comes just at a time when Circle is reportedly in discussions with Ripple and Coinbase for a potential sale.

Market analysts believe that big fish are focusing on this acquisition Circle’s user base, on-chain application integrations, and extensive liquidity. The true value of USDC lies entirely in its on-chain presence in the decentralized finance (DeFi) sector. Interestingly, the Circle Payments Mainnet went live earlier this week, after launching last month, as a competitor to the Ripple Payments network.

How Big Banks Could Change the Stablecoin Game?

It’s now or never for Wall Street banking institutions to adapt to stablecoin market demand, as big tech firms and retailers enter the space. Not pivoting to digital assets could mean risking their payments and deposit base. France’s Société Générale plans to introduce a USD-backed stablecoin on the Ethereum blockchain. Jeff Dorman, CIO of Crypto institutional investment firm Arca said:

The banks who were hired, and failed twice, to help Circle IPO now realizing “hey this is a pretty easy business to earn 100% net interest margins. Let’s just do it ourselves”

Although big banks seek to address the rising competition from the crypto sector, this initiative is still in the conceptual phase, as a large of the progress hinges on upcoming legislation , including the GENIUS Act, which recently advanced in the Senate.

The GENIUS Act outlines a framework for both banks and nonbanks to issue stablecoins, while restricting public companies outside the financial sector. Banks see an opportunity to harness stablecoins for quicker and more cost-efficient payments, particularly for cross-border transactions.