A growing number of stablecoin companies are rushing to list publicly, with Circle shares surging more than 400% after listing. But the bullish sentiment isn’t shared by everyone.
Arthur Hayes, co-founder of crypto exchange BitMEX and one of the market’s earliest institutional players, has cautioned that this rush could trigger a massive collapse—especially for retail investors.
In his latest Substack blog post, Hayes said Circle’s upcoming IPO is “grossly overvalued” and part of a larger trend that mirrors past financial bubbles.
He believes the entry of banks and retail giants may soon crowd out existing stablecoin firms, upending the fragile equilibrium in the crypto financial system.
Circle’s valuation questioned as USDC plays catch-up
The concerns stem from Circle’s position in the market.
While its USDC token has gained popularity in the United States and Europe, thanks in part to its association with Coinbase and perceived regulatory transparency, it still lags behind Tether’s USDT in terms of volume and reach.
Hayes notes that Circle has built its brand around being “America = Safe”, but he argues that this narrative hasn’t helped it surpass USDT globally.
Tether continues to dominate the market, particularly in Asia and regions with limited access to traditional banking systems. It serves as the de facto dollar alternative in many economies suffering from inflation or currency instability.
Hayes summarised its position in a tweet shared on 9 June, saying: “The Global South is banked by Tether.” According to market trackers, USDT accounts for more than 70% of the total stablecoin market capitalisation.
Banks, retailers plan in-house stablecoins
A key reason Hayes believes the IPO wave may fail is the shifting interest of traditional finance. Major banks, he says, are unlikely to rely on external issuers like Circle when they could build their own in-house stablecoins.
That means Circle’s potential clients may soon become its competitors.
Retail corporations are also reportedly joining the fray.
Amazon, Walmart, and other global players are exploring digital currencies for faster settlement and loyalty programmes.
In such a scenario, Hayes warns that companies promising to scale stablecoins through bank partnerships may be misleading investors. He wrote, “If the pitch is ‘we’re going to partner with XYZ legacy bank to launch this stablecoin,’ run for the hills.”
Hayes also highlighted that once legacy institutions decide to act, they’ll do so with full regulatory support, rendering many third-party stablecoin firms obsolete.
With the Federal Reserve and European Central Bank exploring frameworks for central bank digital currencies (CBDCs), private issuers may find themselves squeezed out of the system entirely.
Retail investors at risk from market volatility
Despite short-term investor optimism, Hayes anticipates a significant market adjustment driven by “financial engineering, leverage, and impressive performance.”
He expects the overvaluation of stablecoin IPOs to mirror the rise-and-fall cycles seen in previous financial bubbles. While there may be temporary gains, he argues that retail investors could lose billions once the market corrects.
His concern is not unfounded. Past bull runs have seen high participation from non-institutional traders, many of whom lack access to timely information or the tools to mitigate risks. Hayes urged investors to be cautious as speculative trading around these IPOs intensifies.
According to Circle’s own filings, the firm is banking on the expansion of USDC usage beyond crypto-native platforms. However, if institutional competition increases as Hayes predicts, its market share may be hard to defend post-IPO.
Tweets add urgency to Hayes’ warning
Hayes’ blog post and follow-up tweets have stirred debate across the crypto industry. On 9 June, he tweeted, “Stablecoin IPOs are the latest grift. Retail will get burned again. Just wait.”
The post was widely shared, reflecting mounting scepticism within the crypto community despite rising valuations.
Meanwhile, other market commentators have begun comparing the current IPO spree to the special purpose acquisition company (SPAC) craze of 2020–21, which ended with dozens of collapsed valuations and investor lawsuits.
With Circle preparing to go public and new stablecoin players entering the fray, Hayes’s warning is gaining traction as a cautionary voice amid the hype.
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