'The hottest stablecoin.' Less than a month after the initial public offering (IPO) on June 5, the stock price of Circle, which issues the stablecoin USDC, skyrocketed from $31 to $248. The market capitalization surged by 700% from about $5.6 billion to $45 billion. Recently, after news of a capital increase, it has maintained the $137 level, but there is still buying momentum amid high interest from domestic individual investors in overseas stocks.
Heath Tarbert, president of Circle, who visited Korea, has a busier schedule than anyone. According to sources, he meets with officials from cryptocurrency exchanges, Korea's largest blockchain investment firm Hashed, and government officials including the heads of the four major banks and Lee Chang-yong, the governor of the Bank of Korea.
In a meeting at the Le Méridien hotel lounge in Myeongdong, central Seoul, on the 21st, Tarbert evaluated the potential of Korea's cryptocurrency market highly and noted that he looks forward to partnerships with domestic corporations. At the same time, he emphasized that regulations are crucial for the introduction of the won stablecoin. He explained that stablecoins have become an inevitable trend, and it is essential for financial authorities to recognize this as a proper evolution and to quickly introduce sound regulations. The following is a Q&A with Tarbert.
―You chose Korea as your first destination after the IPO. What is the reason?
"Korea, with its overwhelming transaction volume in the cryptocurrency space, is one of the most notable countries in the industry. Therefore, I visited Korea to meet potential partners and to communicate with government officials to learn how Circle can assist. Korea has always been an important financial center, and as the digital asset market develops, I believe that Korea will play a leading role in this field as well."
―I hear you are meeting with various Korean corporations.
"I have met with officials from major cryptocurrency exchanges in Korea and will meet with large financial institutions like banks, as well as large corporations. Finally, I plan to meet with Korean government officials to share how cryptocurrency policies are developing in each country and what we have learned."
―Who is the most important partner among them?
"Everyone is an important partner, but for now, it's the cryptocurrency exchanges. This is because they are using blockchain and stablecoins the most. However, in the future, I expect banks and regular corporations to participate more as well."
―Does expanding the circulation of USDC also help other countries?
"Yes. USDC is very useful for those who need dollars. USDC is much easier to move than paper currency. I believe stablecoins are the most useful form of money and are easily convertible with other currencies."
USDC can ideally be combined with Central Bank Digital Currencies (CBDCs) or local fiat currency-based stablecoins. To move money quickly, smoothly, and cheaply across borders, USDC is a far better alternative than existing financial systems. This applies not only to Koreans with families abroad but also to Korean corporations."
―Many investors have concerns about Circle's revenue structure, which mainly consists of interest income earned from depositing USDC 1-to-1 in U.S. dollars or short-term government bonds.
"That's a valid point. However, we are focusing on the expansion of USDC distribution rather than interest rates. Circle is not just a USDC issuer; it is a company that creates an infrastructure platform to build the future financial system. In addition to interest income, we are launching various infrastructures and services that can generate revenue. Recent examples include the Ethereum Layer 1 blockchain Arc and the Circle Payment Network. Through these, we will make the global financial system more efficient, and additional revenue will be generated from that."
―Do you have a strategy to compete with Tether (USDT), which holds a 62% market share in the stablecoin market?
"Circle takes a long-term view. We prioritize regulatory compliance as our core value. We believe that a stablecoin that complies with regulations will ultimately be reliable, transparent, and usable in the world's largest markets, such as the European Union. Circle complies with laws and regulations in all distribution countries."
―In Korea, after the Terra-Luna incident, people are more sensitive to the stability of stablecoins. Circle also experienced a disconnection of dollar pegging during the collapse of Silicon Valley Bank (SVB).
"First of all, Terra and Luna were not stablecoins backed by reserve assets. This distinction must be made clear. For a stablecoin to be stable, it must be backed 1-to-1 by important assets with high liquidity, and the reserve situation must be completely transparent."
During the collapse of SVB, people expressed concerns about the U.S. banking system, leading to a breakdown in the dollar pegging and market distortions. At that time, the U.S. government limited stablecoin issuers like Circle from depositing money in banks, which led to secondary market dislocation issues. Now, with the Geniuses Act in place, the situation has completely changed. We possess a substantial amount of cash assets in important and stable banks worldwide."
―Traditional finance is concerned that stablecoins could be used for illegal activities such as money laundering.
"I am well aware of their concerns, and that is why we are engaging more with various central banks around the world. Before becoming the president of Circle, I worked on financial safety at the U.S. Commodity Futures Trading Commission (CFTC). Therefore, I believe that sound regulations that can address traditional finance's concerns are necessary for stablecoins to be utilized properly. Discussions between central banks and regulatory authorities are crucial for that."
Many competitors do not want to comply with regulations. Complying with regulations can limit activities and restrict revenue. However, Circle's most important principle is regulatory compliance. That is why we meet with regulatory authorities. If stablecoins are properly regulated, they can help stabilize the financial system and contribute to its improvement."
―Can we expect to hear news of additional cooperation with Korean corporations soon?
"Of course. Circle's founding principles are threefold. The first is prioritizing and complying with regulations; the second is maintaining our technology at the highest standard; and the third is collaborating with key partners in each country to build the future financial system. Circle is working to establish deeper relationships and partnerships with Korea's largest financial institutions, securities firms, and cryptocurrency exchanges. We will strengthen our relationship with Korea and plan to announce significant news in the future. Please look forward to it."