Arthur Hayes warns that the post-Circle IPO stablecoin boom could trigger a speculative bubble, with most new entrants likely to fail.
BitMEX co-founder Arthur Hayes has warned that several overhyped stablecoin companies would follow the recent public listing of Circle (CRCL). On June 16, Hayes declared that Circle’s IPO marks the beginning of a “stablecoin mania” cycle, one that will ultimately see most new entrants fail.
The expert predicted that a bubble will form and burst once a high-profile issuer uses “financial engineering, leverage, and amazing showmanship” to attract billions in investment. He called these emerging firms “Circle copycats” and cautioned investors to trade them like a “hot potato.”
Hayes’ statements come as the US Senate prepares to vote on new stablecoin legislation today, a move that could further catalyze the hype.
Why Hayes Believes Newcomers Will Fail
According to BitMEX co-founder, the core challenge for any new stablecoin company is distribution. He identifies three effective channels: centralized crypto exchanges, major Web2 platforms like social media giants, and traditional banking institutions. Without access to these, he believes new issuers stand little chance.
Hayes explained that established players already control these pipelines, forcing newcomers to pay high exchange fees or offer high yields to depositors. He added that social media firms and banks are likely to develop their own stablecoins, further squeezing out competition.
While Hayes believes Circle is currently “insanely overvalued” and gives 50% of its interest income to Coinbase, he predicts that its stock will likely remain high. CRCL shares, which launched publicly on June 5, are already up more than 80%.
Meanwhile, JPMorgan Chase recently filed a trademark application for “JPMD,” suggesting plans to expand its blockchain offerings, potentially including new stablecoin initiatives.
JPMorgan already operates JPM Coin, a dollar-pegged token used for real-time institutional payments. Reports also indicate that major US banks are exploring a joint stablecoin venture through Early Warning Services and The Clearing House.
Stablecoin Market Expands Amid Regulatory Growth
This renewed institutional interest coincides with increasing regulatory clarity in the US. Last week, the Senate passed the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) with strong bipartisan support.
If passed by both houses of Congress, the bill would move to President Donald Trump for final approval.
The stablecoin market currently holds a capitalization of over $250 billion, led by Tether’s USDT at $156.3 billion and Circle’s USDC at $61.3 billion. Analysts at Standard Chartered forecast that, with proper regulation, the stablecoin sector could surge to $2 trillion by 2028—a growth that could also support adjacent crypto sectors like no KYC casinos, which prioritize user privacy and decentralized access.
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