Arthur Hayes, former head of the cryptocurrency exchange BitMEX, analyzes the current stablecoin market in his recent essay “Taking a Position” and warns investors about the risks of a new wave of IPOs for similar projects.
This is reported by Business • Media
“Disclaimer: An approximate summary of the content of Arthur Hayes’ essay is provided for informational purposes. The opinions expressed below are the personal views of the author of the original source. His opinion may not coincide with that of the Incrypted editorial team.”
Evolution of Stablecoins: From Tether and Circle to a New Wave of Issuers
The reason for Hayes’ essay was the high-profile IPO of Circle, which he believes is just the beginning of a new surge of interest in stablecoins. The author points out that such projects are often overvalued, and access to key distribution channels for new players is nearly impossible. This is likely to lead to a series of IPOs that will not be able to replicate the success of industry leaders.
Hayes examines the history of stablecoin launches using Tether and Circle as examples, emphasizing the importance of having access to exchanges, banking structures, or social platforms. Without such channels, even promising tokens will struggle to enter the market and gain widespread support. He recalls his own experience working in Greater China, where USDT quickly became the primary means for transfers and value storage due to the trust of Chinese traders and the global influence of the diaspora.
Challenges for New Issuers: Competition, Distribution, and Financial Risks
In his analysis, Hayes emphasizes that after the wave of ICOs and the active development of cryptocurrency exchanges, Tether and Circle have established dominant positions in the stablecoin market. Their success has been aided by having their own infrastructure, a broad customer base, and timely responses to market changes. At the same time, attempts by major tech companies like Meta or X to enter this market have faced resistance from traditional banks and regulators. Now, in 2025, tech giants are once again considering launching their own stablecoins, complicating the situation for startups: they will find it difficult to secure distribution partners.
According to Hayes, traditional banks are gradually losing the ability to profit from classic financial operations, as stablecoins provide a simpler and cheaper way to move digital dollars. New stablecoin issuers are forced to compete in an environment where the main distribution channels are already occupied, and banks and social networks are creating their own alternatives. This means that most new projects are unlikely to achieve sustainable profitability.
The profit model of stablecoins is based on net interest income and investments in government bonds or arbitrage in the crypto market. The most successful example is Tether, which does not pay interest to USDT holders and retains all profits for itself. Other issuers, like Circle, are forced to share revenue with partner exchanges, such as Coinbase.
Hayes warns directly: due to the closed nature of distribution channels and high competition, investors risk losing capital by investing in new public stablecoin projects. However, the allure of the model and potential profitability, bolstered by a favorable political and economic backdrop, stimulate the emergence of new players trying to replicate the success of Tether or Circle.
Hayes also emphasizes that investors should only consider companies that have access to the American stock market and offer products related to digital dollars. He is skeptical about the prospects of “copies” of Circle, which may be even more overvalued, lacking unique competitive advantages or strong distribution channels.
In conclusion, the author notes: as long as market conditions remain favorable, the stocks of issuers may rise, but once the situation changes, most investors could face significant losses.