The Surge of Stablecoin IPOs: Arthur Hayes Analyzes Key Factors for Success and the Imminent Capital Bubble

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Circle’s Listing is Just the Beginning

The Core of Stablecoin Success: Distribution Channels

The IPO Frenzy is Coming, and the Risk of Fundraising is Rising

Banks and Social Media Eyeing the Market

Arthur Hayes Warns of an Impending Bubble

Arthur Hayes was the first to comment on Circle’s IPO, stating its valuation is “obviously overvalued.” However, due to the heated interest in stablecoins, the stock price may continue to rise. He candidly remarked:

“This signifies that the stablecoin bubble has officially begun, and you will soon see a series of new stablecoin companies launching IPOs in the U.S. stock market.”

However, most of these startups lack core competencies and are unable to distribute or disseminate stablecoins through exchanges, Web2 giants, or traditional banks.

Arthur Hayes further pointed out that the key to stablecoins lies not in technology but in “the ability to distribute on a large scale.” Tether’s rapid growth was largely due to its close relationship with Bitfinex and its ability to capitalize on the strong demand for U.S. dollar assets in China and Asia, successfully becoming a “digital dollar alternative.” This allowed it to become the largest stablecoin by trading volume globally since 2015, establishing an unshakeable network effect.

In contrast, while Circle has a compliant background and backing from U.S. politics, it lacks deep connections with the Asian market and must rely on partnerships with Coinbase to expand its user base. According to Arthur Hayes, Circle even agreed to give Coinbase 50% of its spread revenue as a condition for this collaboration.

In the “high-profit, storytelling-rich” sector of stablecoins, Arthur Hayes predicts that a wave of IPOs emulating Circle will soon emerge. These companies will attract institutional investors and retail participants with claims of partnerships with Web2 giants, collaborations with traditional banks, and revolutionary payment and foreign exchange market narratives. However, he bluntly states that these are merely “packaged scams,” as all effective distribution channels have already been locked down by the three giants: Tether, Circle, and Ethena, leaving no room for others.

Nevertheless, this does not mean that the current stablecoin giants will not face competition. Arthur Hayes further analyzes that the biggest competitors in the future will not be startups but social media platforms and large banks:

• Social media companies (such as Meta, X, Google): With billions of users and data, they can natively embed stablecoin systems and issue them on a large scale without partnerships.
• Traditional banks: Although strictly regulated, they may also promote their own stablecoins in response to the encroaching trends in payment and foreign exchange markets.

However, Arthur Hayes emphasizes that these two types of institutions will not partner with third-party startups due to regulatory restrictions, data isolation, and risk control factors that force them to build their own technologies and systems. Furthermore, Arthur Hayes reveals that the most profitable business model for current stablecoin issuers comes from:

• Non-interest bearing customer deposits
• Investing in short-term U.S. Treasury bonds or arbitrage strategies (e.g., cash-futures positive spread trading)
• Generating extremely high profits from spread revenue

Using Tether as an example, it operates with a team of only about a hundred people yet earns billions of dollars annually, making it “the most profitable bank per capita globally.” This is precisely why those tech giants and financial institutions are eyeing this domain, hoping to penetrate it.

He notes that the next round of bubbles will be driven by IPOs that narrate grand tales of “de-dollarization” and the “digital dollar revolution,” igniting a new wave of speculation through financial engineering and leverage design (even mimicking Terra/Luna).

In light of the impending bubble, Arthur Hayes advises the public not to believe in stablecoin startups claiming partnerships with certain banks or social platforms, as these could merely be scams looking to harvest profits.