Compliance and Ecosystem Dynamics of Stablecoins (Issue 1 · Week 29, 2026)

01Event Overview

On July 10, 2026, Circle faced criminal charges for refusing to freeze assets worth $380,000, triggering a crisis regarding the compliance of stablecoins. On the same day, the market value of USDT temporarily surpassed that of Ethereum, highlighting the market’s strong demand for permissionless dollar transfers. On July 15, Circle’s financial reports showed that channeling costs of $1.4 billion consumed more than half of its revenue, revealing that the profit models of stablecoins were being reshaped by competition among platforms.

02Course of the incident

• [2026-07-08] Market review: Examining the chaotic history of private banks, comparing it with the rise of current private stablecoins. It points out that in a scenario where governments ban CBDCs but allow private companies to issue their own currencies, the value of the dollar depends on the credibility of issuers rather than national guarantees.
• [2026-07-09] PayPal partners with Polygon to upgrade the infrastructure behind PYUSD, targeting the $2.6 trillion cross-border market, and uses its compliance advantages to compete with USDC.
• [2026-07-10] Wisconsin and New York state file criminal charges and protests against Circle for refusing to freeze fraudulent assets, sparking intense debates over the technical architecture and legal obligations of stablecoins.
• [2026-07-10] USDT and USDC establish separate roles in payments and DeFi applications. Strategy’s unprecedented sale of Bitcoin sparks controversy, while Pioneer Leading signals that traditional finance is fully embracing tokenization.
• [2026-07-10] Ark Invest notes that although OUSD has the support of 150 institutions, it struggles to challenge the dominance of USDT and USDC, as exchanges prioritize liquidity over meager interest rates.
• [2026-07-11] After half a year of preparation, a compliance-focused blockchain is suddenly propelled by a cat to a market value of 200 million.
• [2026-07-12] Circle receives final approval from the OCC to establish a national trust bank, with its stock rising by over 10% before trading begins. This marks a shift in the core competition among stablecoins from token issuance volume to control over custody and settlement infrastructure under federal regulation.
• [2026-07-14] JPMorgan lowers its rating on Coinbase, citing its 90% revenue-sharing agreement with Hyperliquid and the declining circulation of USDC, which are forcing issuers into a prisoner’s dilemma where they must sacrifice profits to maintain market share.
• [2026-07-15] Circle’s 2025 financial report shows that $1.4 billion in costs associated with Coinbase consumption accounts for more than half of its revenue, indicating that platform competition is reshaping the profitability model of stablecoins.
• [2026-07-15] BlackRock, through its BUIDL bond tokenization initiative and Aladdin risk management system, is shifting from using ETFs as a lure to taking control of on-chain collateral and pricing power, thereby building an underlying operating system for the crypto world.
• [2026-07-15] Faced with the impact of $33 trillion in annual stablecoin transactions, giants like JPMorgan, together with TCH, are establishing a tokenized deposit network in an attempt to replicate the success of Zelle and defend their market positions in payments.

03Impact Analysis

04Impact Analysis

05Market Price Dimension

Circle received final approval from the OCC to establish a national trust bank on July 12, 2026, which directly drove its stock price up by over 10% before market open. However, its profit structure faces severe challenges; financial reports for 2025 showed that distribution costs related to Coinbase accounted for more than half of its revenue. On July 15, 2026, JPMorgan downgraded Coinbase’s rating, pointing out that its 90% revenue-sharing agreement with Hyperliquid and the declining circulation of USDC have forced the issuer into a dilemma where it must sacrifice profits in order to maintain its market share. The current price of USDC is $0.9998, with a 7-day change rate of -0.0%, while the market sentiment index remains in a neutral range of 55/100.

06Regulatory Response Dimension

The regulatory struggle is intensifying on both sides. On one hand, Circle’s approval for federal trust operations marks a shift in the core competition toward control over custody and settlement infrastructure under federal regulation. On the other hand, Wisconsin and New York State filed criminal charges against Circle on July 9, 2026, for failing to freeze $380,000 worth of fraudulent assets, triggering a fierce conflict between technical architecture requirements and legal obligations. Traditional banks are also fighting back actively; giants like JPMorgan, together with TCH, are establishing a tokenized deposit network in an attempt to replicate the Zelle model in order to counter the impact of stablecoins, whose annual transaction volume reaches $33 trillion.

07Ecosystem Impact Dimension

The ecosystem structure is evolving from single-token issuance toward control over underlying operating systems. BlackRock is leveraging its BUIDL and Aladdin systems to shift from offering ETFs to taking control over on-chain collateral and pricing power. USDT and USDC have established a dual role in payments and DeFi applications, with USDT’s market value once exceeding that of ETH, indicating that users’ primary need is permissionless dollar transfers. Although OUSD has received support from 150 institutions, it struggles to challenge the duopoly due to liquidity constraints and fragmented interests. PayPal, meanwhile, has partnered with Polygon to upgrade PYUSD, targeting the $2.6 trillion cross-border market.

08Subsequent focus areas

Key Points to Monitor Going Forward

1. Implementation of Circle’s Trust License and Control over Infrastructure
   Circle received final approval from the OCC to establish a national trust bank on July 12, 2026, with its stock rising by over 10% before market open. It will be necessary to closely track the scale of custody and settlement services once this trust bank begins operations, as well as whether it will shift its competitive focus from token issuance volume to control over infrastructure under federal regulation, as anticipated. Any regulatory compliance issues or slower-than-expected business expansion could undermine its advantage over traditional banks.

2. Pressure from Coinbase Revenue Sharing and Eroded Profits
   Circle’s 2025 financial reports showed that $1.4 billion in costs associated with Coinbase accounted for more than half of its total revenue. JPMorgan downgraded Coinbase’s rating on July 15, 2026, citing the 90% revenue-sharing agreement with Hyperliquid and declining USDC circulation, which are forcing issuers into a dilemma where they must sacrifice profits to maintain market share. Close attention should be paid to changes in USDC circulation and Circle’s net profit margin. If the revenue-sharing ratio remains high while circulation continues to decline, its profit model will face serious challenges.

3. Progress in Traditional Banks’ Countermeasures Against Tokenization
   In response to the $33 trillion annual transaction volume driven by stablecoins, giants like JPMorgan partnered with TCH on July 15, 2026, to create a tokenized deposit network aimed at replicating the success of Zelle to defend their position in payments. It will be important to monitor the user adoption rate and transaction throughput of this network. If it can scale up rapidly, it could pose a significant alternative threat to private stablecoins like USDC in payment applications.

4. BlackRock’s Development of an On-Chain Infrastructure Platform
   By leveraging BUIDL for government bond tokenization and its Aladdin risk management system, BlackRock is shifting from using ETFs as a lure to gaining control over on-chain collateral and pricing power. Attention should be paid to the growth of BUIDL’s asset base and the penetration of Aladdin’s systems in the crypto industry. If it succeeds in developing an underlying operating system for the crypto world, it could reshape the logic behind collateral management and pricing for stablecoins.

09Related Reads

1. “Refused to Freeze: 380,000 People Charged Criminally, Compliance Crisis for Stablecoins Erupts”
2. “USDT’s Market Cap Surpasses Ethereum: Users Prefer On-Chain Dollars, Misunderstanding of Public Chain Value”
3. “USDC Leads in Supply but Profits Are Eroded: Circle’s $1.4 Billion Cost”
4. “800 Daily Active Users Yet Monthly Profits Exceed 100 Million: Who Is Backing Your Dollar?”
5. “The $2.6 Trillion Payment Sector: PayPal Seeks to Break Through with PYUSD”
6. “Diverging Daily Activity and Giants’ Shifts: USDT for Payments, USDC for Settlements, and Strategy’s Exception”
7. “150 Alliances Fail to Break the Duopoly: Why Did Binance Abandon Interest Rate Differences?”
8. “Circle Gets Federal Trust License: Stablecoin Competition Shifts from Issuance to Infrastructure Control”
9. “90% Profit-Sharing Agreement Triggers Prisoner’s Dilemma: Coinbase’s Profits Eroded by Hyperliquid”
10. “BlackRock’s Secret Takeover: From ETF Bait to On-Chain Operating System”
11. “Trillion-Dollar Stablecoins Under Pressure, U.S. Banking Industry Unites to Replicate Zelle in Counterattack”