Introduction

The success or failure of IP tokenization does not depend on whether tokens can be issued. Companies holding valuable intellectual property must be willing to participate, creators must be able to raise capital, and investors and users must receive corresponding rights and rewards. Blockchain can support this process, but it cannot create the underlying reason for a transaction to take place.

Soneium, developed by Sony and Startale Group, is working to address this challenge in the entertainment industry. Its recently announced partnership with DayOneDream represents an effort to connect K-pop IP and related revenue streams to onchain financial structures. The goal is to expand both funding opportunities for creators and economic participation for fans and investors.

However, the challenges are as significant as the market opportunity. Story, which previously attracted attention as a blockchain specializing in IP, shifted its business focus toward AI training data under the name The Data Foundation this year. Its pivot illustrates that technological capabilities and investment funding do not necessarily guarantee the emergence of a viable market.

What, then, makes Soneium different? The key lies in whether Soneium can connect companies supplying content, organizations managing rights, services engaging fans, and businesses structuring investment products. If these connections function effectively, IP tokenization could evolve beyond an experiment in selling new digital products and lead to changes in how content is produced and monetized.

An interview with Yuji Kumagai, Head of Soneium Protocol, provides insight into this strategy. Rather than attempting to establish a massive IP financial market from the outset, Soneium intends to create smaller success cases in music and character-related IP before expanding. The most compelling initial path is not to divide and sell ownership of famous IP to the public, but to provide new financing and monetization tools for projects backed by real businesses and cash flows.

1. Soneium Aims to Change the Flow of Capital, Rather Than How IP Is Owned

“We want to provide creators with opportunities to raise funding on a more global scale when developing new works.”

— Yuji Kumagai, Head of Soneium Protocol

When explaining IP tokenization, Yuji’s first point was not ownership, but financing. The objective is to offer creators alternatives to traditional funding methods while giving fans and investors opportunities to participate in the economic value of entertainment that was previously difficult to access.

This direction is connected to Soneium’s original vision. When Sony announced Soneium’s development in August 2024, it presented the goal of creating a world where the use of Web3 becomes part of everyday life. Even then, Sony stated that it would explore mechanisms for protecting creators’ rights, returning revenue to creators and fans, and developing services utilizing Sony’s businesses and IP. Soneium launched its mainnet in January 2025.

The recent emphasis on IP financing therefore does not represent a departure from the original vision. Rather, the broad goal of connecting creators and fans is becoming a more concrete business question: through what mechanisms can creators’ economic conditions be improved?

Content production requires capital upfront, while revenue is generated later. Startale Group, Soneium’s co-developer, and Japanese entertainment company TWIN PLANET identified this timing gap as a central challenge in their 2025 partnership announcement. They outlined plans to explore production financing, and rights management.

Addressing this problem does not necessarily require selling the entirety of a copyright. Depending on the contractual structure, funding can also be raised by utilizing a portion of revenue from a specific project or by financing against receivables generated by a business. WAVIST’s previous transaction, for example, involved a bond structure backed by performance-related cash flows.

An important distinction must be made regarding the meaning of IP tokenization. Holding a token associated with a work, possessing a license to use that work, and having the right to receive revenue from a particular business are three different things. Purchasing an NFT does not automatically mean acquiring the copyright to the underlying work.

The economic opportunities Soneium seeks to create begin with determining which rights can be offered and under what conditions. The intended structure allows creators to secure necessary funding without surrendering all their rights, while participants receive economic value within the scope explicitly defined by contracts.

The objective is not to turn IP into tokens, but to enable IP to become capital for future creative activity. From this perspective, Soneium’s real competitors are not limited to other blockchains. They also include traditional production advances, loans, and project investment structures.

2. The Challenge Is Not Technology, but Giving Rights Holders a Reason to Participate

The barriers in this market do not disappear simply because the technology improves. Companies holding IP have reasons to control how their assets are used and how their brands are represented. For them to adopt new infrastructure, they must be able to generate additional benefits while maintaining that control.

Story’s pivot demonstrates this challenge. In 2024, Story developer PIP Labs raised $80 million in a Series B funding round led by a16z. In 2025, it launched a mainnet designed for IP registration and licensing. However, when announcing its transition to the DATA Foundation in June 2026, the company explained that rights holders of high-value music, gaming, and brand IP wanted to retain control, creating conflicts with an open licensing model. By contrast, stronger demand had been identified in AI training data.

The case illustrates a company that made progress in technological implementation and fundraising but could not sufficiently validate its original business hypothesis of general-purpose IP infrastructure through market demand, ultimately shifting its focus to a different market.

Soneium’s potential differentiation lies precisely in this business-related barrier. According to the official ownership structure, Sony Block Solutions Labs, the company leading Soneium’s development and launch, is owned 90% by Sony Group and 10% by Startale Group. In other words, Soneium is not an external project merely borrowing the Sony name. Its development has been led by a company in which Sony Group holds a controlling stake.

Persuading content companies from outside the industry and structuring partnerships within an established network of shared business interests represent different starting points.

Yuji also emphasized the importance of allowing rights holders to make their own decisions.

“We believe that creators should always have the right to make these decisions. If creators want to share those rights with fans or investors, blockchain can make that possible.”

This statement provides a useful framework for understanding Soneium’s strategy. Rather than forcing rights holders to adapt to new technology, the goal is to create new types of transactions within boundaries they can accept. Limited licenses for specific works, financing for individual projects, and participation benefits for fans can each be structured under different conditions.

Nevertheless, proximity to the entertainment industry does not guarantee success. What matters is whether these relationships translate into real services and transactions. Soneium already has several implementation cases that can be used to evaluate its progress.

3. Real Industry Touchpoints Across Rights Management, Fandom, and Distribution

Rights Management: Blockchain Enters JASRAC’s Operations

In April 2025, the Japanese Society for Rights of Authors, Composers and Publishers (JASRAC) migrated the blockchain used for the proof-of-existence function of its music information management system, KENDRIX, to Soneium. The migration moved the recording of registered music file hashes from a private blockchain to a public blockchain.

The significance of this case goes beyond securing a partnership with a prominent institution. It shows that Soneium has begun to be used in actual operations related to music rights management.

However, the confirmed scope is limited to the proof-of-existence function. JASRAC’s entire copyright portfolio and royalty operations have not been transferred to Soneium. The current achievement is Soneium’s entry into rights management operations. The next challenge is determining how far this can expand into licensing and settlement.

Fandom: Services That Change Existing Fan Behavior

YOAKE entertainment is an important player in Soneium’s engagement with fans. YOAKE is an entertainment joint venture involving ASOBISYSTEM, TWIN PLANET, W TOKYO, Y&N Brothers, and other companies. Through its Soneium-based IRC APP, YOAKE records fan support activities and connects them to event benefits. In February 2026, it received approximately ¥500 million in additional investment from Sony Innovation Fund.

IRC APP is the official application of IDOL RUNWAY COLLECTION, an idol and fashion event. The March 2026 event featured Nogizaka46, FRUITS ZIPPER, CANDY TUNE, and other performers. Activities within the app were linked to benefits such as priority admission and seat upgrades.

Early data on behavioral changes has also been disclosed. YOAKE reported that among low-activity users, who accounted for 25% of its user base, the average frequency of social media posting increased from once every 20 days before the app’s introduction to once every two days afterward.

These figures are based on the company’s own analysis and do not isolate the effect of blockchain technology itself. Nevertheless, they provide preliminary evidence that existing fans used a service connected to tangible benefits and changed their behavior.

From a business perspective, the important point is that fans do not need to be convinced of blockchain’s value before using the service. They use it to support their favorite artists more actively or gain access to better event experiences. The technology serves to connect those activities with rewards and benefits.

Distribution: Bringing Digital Products to Existing Consumer Platforms

Commercialization efforts involving well-known IP are also underway. S.BLOX conducted an NFT campaign on Soneium featuring characters from Ghost in the Shell, while YOAKE collaborated with OpenSea to sell official NFTs related to the theatrical release of The Seven Deadly Sins.

An even more significant distribution case involves Mercari. In August 2025, Mercari, Sony Group, and Sony Block Solutions Labs entered into a basic agreement to promote digital content adoption. On the same day, they began selling NFTs associated with “@JAM EXPO 2025” using Soneium. This was a case in which a partnership announcement was accompanied by actual product sales.

Yuji also identified distribution as a central challenge during the interview.

“Distribution after a product has been created has been one of the biggest problems in the cryptocurrency market for more than five years.”

Connecting the various touchpoints Soneium has established reveals its broader strategy. Rights management organizations handle information related to creative works, entertainment businesses connect content with fan communities, and consumer platforms distribute actual products.

This provides evidence that Soneium is not merely infrastructure waiting for demand to emerge from outside the content industry. It has a foundation for embedding services into existing business relationships and consumer activities.

However, the achievements demonstrated so far primarily involve rights records, fan engagement, and digital product distribution. They should not be collectively treated as proof of successful IP financing.

The next step is to demonstrate how much these touchpoints contribute to creators’ financing and the actual distribution of revenue.

4. The Initial Goal Is Not Financing Major IP, but Completing small and mid-sized Projects

“We want to start by creating small and mid-sized success cases without taking on significant risks. That is our short-term goal for 2026.”

Yuji identified music and characters as Soneium’s short-term priorities in terms of IP Tokenization. Rather than beginning with capital-intensive areas such as games or animated films, the plan is to validate business structures at a relatively smaller scale. During the interview, he explained that Soneium intends to launch a limited number of IP tokenization projects this year and expand their scale the following year.

This approach is reasonable. Even if Soneium secures major IP assets from the outset, complex rights structures and long investment periods could require substantial time and expense before the viability of the business model can be assessed. By contrast, projects with clearly defined scopes may make it relatively easier to validate an entire cycle, from fundraising and business execution to settlement.

DayOneDream and WAVIST are the partners helping translate this strategy into practice.

DayOneDream is a group operating K-content businesses across music production and publishing, artist IP, live performances, and related areas. WAVIST is a tokenization platform that uses this business foundation to structure cash flows from performances and content into investment products, while supporting investor connections and post-issuance management.

WAVIST is operated by Pledge, and the roles of the issuers of individual products and the platform itself are distinct.

WAVIST’s previous transaction illustrates what IP financing can mean in practice. According to materials published in June 2026, it completed the issuance, principal and interest repayment, and token burning of a $1 million bond backed by cash flows from Korean performances.

A special purpose vehicle issued the bond, supported by a group-level guarantee, while the token records were maintained on Ethereum.

However, this was an existing WAVIST transaction disclosed by the company and cannot be considered a result directly attributable to Soneium. Nevertheless, it is meaningful that a business with experience managing a financial product through repayment, rather than merely planning an issuance, is joining the Soneium ecosystem.

What Soneium needs to contribute is more than token issuance functionality. It must provide additional IP supply, user touchpoints, investor distribution, and connectivity between services to existing product structures.

The partnership announced in September aims to enable precisely this expansion. However, the announcement did not specify the rights or issuance terms of the first product expected to launch on Soneium.

Based on this case, the initial market is likely to differ from a market in which copyrights to famous artists are sold directly to fans. A market that financially structures performance or content projects with identifiable revenue and connects them with suitable capital may emerge first.

Fans contribute to the value of IP through consumption, promotion, and participation, while investors evaluate financial risks according to separate criteria. These roles may overlap, but they do not necessarily need to be fulfilled by the same people.

WAVIST likewise distinguishes between fan participation products that do not provide financial returns and investment products that require separate contracts and eligibility verification.

Leveraging the power of fandom does not mean turning every fan into an investor. A structure in which fan participation generates business demand and validated businesses attract capital offers a more sustainable starting point.

5. Stablecoins: Liquidity Infrastructure That Keeps the IP Economy Moving

Financing alone does not complete the economic cycle for creators. After a work is produced, it needs to be used more widely, and compensation must be paid for that usage. Soneium’s efforts to pursue IP registration, licensing, and royalty distribution can be understood in this context.

“The first is IP registration, recording who created the original work and when. The second is what we call the IP graph.”

Yuji described a structure that connects original works, derivative creations, and AI-generated content, while distributing royalties to the relevant creators and participants.

The concept extends beyond recording the existence of a work. It seeks to connect usage relationships with economic compensation.

ERC-8432, which Soneium recently expressed its intention to support, represents one potential technical foundation for this approach. The proposed standard would allow independent IP registration systems to record and query assets, licensing terms, and usage agreements in a common format.

The draft was published in September 2026, and Soneium announced its support plan on October 6.

Its business significance lies in reducing the burden of repeatedly interpreting different rights information when connecting individual services. For example, if a video production service or AI agent could check the usage conditions and contractual status of a music track in a standardized way, the process leading to commercial use could become simpler.

However, the proposed standard does not automatically establish the authenticity of legal rights or resolve royalty payments. Its authors explicitly placed payments, royalties, and legal enforcement outside the scope of the core standard. Businesses adopting the standard would still need to build their own mechanisms for rights verification and settlement.

Once the conditions and agreements governing IP usage can be verified, the next step is to make payments and distribute revenue.

This is also why Yuji emphasized stablecoins. He sees them as a means of connecting economic activities related to content onchain, from capital contributed by investors participating in IP products to royalties paid to creators.

The assets he mentioned were the US dollar-based Startale USD (USDSC) and the Japanese yen-based JPYSC.

USDSC was introduced by Startale Group in December 2025 using the platform of stablecoin infrastructure company M0. It was designed for use in transactions, rewards, and other activities within Soneium and Startale App.

JPYSC is a yen-pegged, trust-based stablecoin jointly developed by SBI Holdings and Startale Group and issued by SBI Shinsei Trust & Banking Co., Ltd. It represents an effort to build infrastructure operating seamlessly across traditional financial systems and blockchain networks.

Therefore, yen-based settlement for global IP should not be regarded as an already established achievement. Rather, it should be viewed as a potential application that can expand once the necessary distribution infrastructure is in place.

Yuji’s vision extends beyond improving settlement efficiency. He explained that stablecoins could serve as an entry point connecting fans unfamiliar with cryptocurrency to onchain services.

“In that case, stablecoins could become the entry point through which people hold tokens for the first time.”

One example would involve depositing stablecoins into a vault associated with a particular artist and receiving benefits such as early access.

The important aspect of this model is that the motivation for participation is not limited to investment returns. Fans may participate to access experiences and benefits related to creators they support, encountering onchain assets and services in the process.

From this perspective, stablecoins serve both as a settlement mechanism for IP finance and as a tool connecting fan experiences.

Financing increases opportunities to produce new works, licensing expands opportunities to use those works, and settlement returns the resulting economic value to creators and participants.

What Soneium seeks to establish is not merely a system that turns IP into investment products, but a structure in which capital, usage, and rewards continuously flow around that IP.

The necessity of blockchain must also be evaluated through these connections. If a business involves only one company and a small number of counterparties, traditional contracts and databases may be sufficient.

The value of shared infrastructure becomes greater when multiple rights holders, platforms, investors, and users need to verify one another’s records and conduct repeated transactions.

Soneium’s long-term opportunity lies less in a one-time IP issuance and more in recurring transactions where multiple services can legally use the same IP and pay for that usage.

AI should likewise be viewed not as a separate buzzword, but as a potential customer segment that could expand this demand for IP usage.

6. Soneium Has Potential, but Industry Connections Must Translate Into Economic Advantage

Based on currently available public information, Soneium has established the conditions necessary to enter the IP business.

It has entered rights management operations, secured services used by existing fan communities, and conducted actual sales through a consumer distribution platform. It has also connected with a partner experienced in structuring financial products and managing them through repayment.

It would therefore be difficult to characterize Soneium as merely an abstract IP concept without real implementation.

At the same time, these examples cannot be combined to conclude that IP financing has already been validated. Some components of the business are functioning, but the repeatable economic viability of an integrated model built on Soneium remains to be demonstrated.

Three developments are necessary to evaluate its potential for success.

First, creators’ financing terms must actually improve.

Soneium must enable creators to access a broader investor base, shorten fundraising periods, or retain a greater scope of rights than existing financing methods allow.

Even if blockchain transaction fees are low, the economic advantage will be limited if total costs, including legal, structuring, and distribution expenses, are higher.

What matters is not the fact that capital was raised onchain, but how the financing terms improved because it was raised onchain.

Second, post-issuance performance must lead to subsequent transactions.

Payments promised to investors must be fulfilled, revenue and expenses must be verifiable, and the same business operators must choose to use the structure again for future projects.

One successful repayment is only the starting point. For this to become a new business model, contracts and verification procedures must be reusable across multiple projects.

Third, fandom services and financial products must create additional value for each other.

Fan participation needs to translate into actual sales and repeat engagement. Financing must enable the production of new content, which in turn attracts users.

High levels of fan activity alone do not prove investment demand or profitability. Fan engagement data may provide supporting information for understanding demand, but it cannot replace cash flow verification.

One particularly difficult challenge Soneium must address is selecting suitable projects.

Businesses that can already secure favorable financing through traditional channels may have little reason to adopt a new structure.

Conversely, accepting projects simply because they struggle to obtain conventional financing could increase investment risks.

This is where industry expertise becomes important.

Rather than focusing solely on the popularity of IP, Soneium must understand production and distribution structures, the scope of rights, actual demand, and the counterparties responsible for settlement.

The potential strength of Soneium and its entertainment partners should not end with bringing recognizable content into the ecosystem. It must also be used to determine which businesses can successfully be connected with financial structures.

If these conditions are met, the most realistic initial success would likely be a production financing model focused on specific segments.

The path would involve repeatedly financing and settling projects in areas with definable business scopes, such as music, live performances, and characters, before extending validated contracts and operational models to other projects.

This approach is consistent with Yuji’s strategy of building success through smaller initial cases.

Conversely, if official NFTs and one-off campaigns continue to increase without improving creators’ financing terms or revenue from IP usage, Soneium may remain a useful infrastructure for fan marketing.

That would still constitute a business, but it would represent a different level of achievement from the onchain entertainment economy envisioned in this interview.

Conclusion: A Market Where Valuable IP Becomes Capital for the Next Creation

“Technology is just technology. It is one tool, and other technologies can also be used. Ultimately, the goal is to empower creators.”

Yuji’s statement provides the most direct criteria for evaluating Soneium’s success.

What matters is whether creators can produce new works more easily, whether rights holders can generate additional revenue while maintaining control, and whether participants receive clearly defined rights and rewards.

Soneium’s potential lies in the fact that it is not attempting to create an entirely new market disconnected from the content industry.

Instead, it is connecting blockchain to existing rights management, fandom, distribution, and financial businesses.

This allows Soneium to begin with smaller transactions that businesses are willing to accept, without requiring all IP to become openly accessible from the outset.

If successful, the impact could extend beyond financing individual projects.

As experience accumulates through repeated contracts and settlement processes, there may be opportunities to reduce the costs of evaluating and executing subsequent projects.

As a result, content that previously struggled to access financing because of its limited scale or high operational burden could gain access to new sources of capital.

This represents a potential path for Soneium’s expansion.

However, it remains a prospect rather than an established outcome.

Soneium must connect its existing industry touchpoints to actual financial and licensing transactions and demonstrate that those transactions offer advantages over traditional methods.

Sony possesses the business conditions necessary to overcome the limitations of IP tokenization.

Yet this advantage will not be realized simply because Sony owns IP or understands the industry. It will materialize only when rights holders are given compelling reasons to participate.

The outcome Soneium needs to create is not more IP tokens.

It is a repeatable market in which valuable IP gains access to new capital, and the works produced with that capital generate revenue and opportunities for further creation.

This content is analysis material for information and research purposes and is not intended to recommend buying, selling or holding specific assets (stocks, tokens, etc.) or to replace investment judgment. All opinions and interpretations included in the text are based on public information and reasonable assumptions at the time of writing and may change depending on future market conditions or changes in policies and regulations.

This research was conducted independently without receiving any financial compensation, sponsorship, or compensation in connection with the writing of this article from the project or its affiliates. However, the author or affiliated organization may have had a paid business relationship with the project in the past, and thus a conflict of interest may exist. The opinions and interpretations contained in the text are based on the independent judgment of the author.

The final responsibility for investment decisions lies entirely with the reader, and the author assumes no legal responsibility for investment results based on this content.

© 2026 Exilist Inc.

This report was prepared based on information available as of August 31, 2026.

It draws on official announcements from Ondo Finance and its partners, materials from the SEC, CFTC, and DTCC, official Ondo documentation, and data from RWA.xyz.

The responses from Min Lin, MD of Global Business Development at Ondo Finance, are drawn from an interview conducted directly by Exilist. They have been lightly edited for clarity and to remove verbal repetition without altering their meaning.

Introduction

The biggest illusion in tokenization is the belief that once a token is issued, a market will naturally follow. Representing a stock through a smart contract is not difficult. Making that token continuously tradable, keeping it aligned with the underlying stock, and operating dividends, redemptions, collateral, and liquidations are entirely different challenges.

The U.S. stock market is the world’s largest and most liquid capital market. Yet it is not equally accessible to everyone around the world. Investors must navigate country-specific brokerage accounts, market hours, settlement networks, foreign exchange, and regulation. Even after purchasing a stock, the asset usually remains locked inside a single brokerage account. It cannot be sent directly to another person, and using it as collateral in another financial service requires separate agreements and transfer procedures.

Tokenization emerged as a technology for reducing these constraints. But placing a stock on a blockchain does not, by itself, create a new market. The token price must remain connected to the underlying asset, and investors must be able to enter and exit at any time. Exchanges and wallets must support the token. Dividends and corporate actions must be processed. Price oracles and liquidation systems are required before the asset can be used as collateral, in lending, or in derivatives. Above all, investors must clearly understand what they actually own and against whom they can assert their rights.

For years, the RWA market competed over what could be tokenized. The center of competition is now moving beyond issuance. The question is who can distribute more assets around the world, bring traditional-market liquidity onchain, and transform holdings into collateral and productive capital. Ondo is one of the clearest examples of this shift.

Ondo began with U.S. Treasuries. Through OUSG and USDY, it built capabilities in underlying-asset custody, stablecoin-based minting and redemption, yield distribution, and regulatory compliance. It then applied the same operating system to hundreds of U.S. stocks and ETFs. After creating the assets, Ondo expanded distribution across exchanges, wallets, and chains. Through Morpho and Ondo Perps, it turned tokenized stocks into lending collateral and derivatives margin. Its connections with Oasis Pro, Broadridge, and DTCC link this international distribution network with the regulated U.S. market.

Ondo’s next challenge is not to issue more assets. It is to make each unit of an already-issued asset generate more financial activity.

If TVL represents the inventory of assets being held, trading volume, lending, and open interest represent how actively those assets circulate within the market. If inventory grows without circulation, Ondo becomes a large digital securities warehouse. If the same stock token repeatedly supports spot trading, collateral, lending, hedging, and portfolio margin, Ondo moves closer to becoming market infrastructure.

Ondo Perps was created to bridge this gap. A tokenized-stock issuer expanding into derivatives is not an arbitrary extension of its business. It is a strategic decision to transform spot tokens from static holdings into productive capital and connect issuance with trading activity and risk management. Ondo’s concept of onchain prime brokerage only becomes a concrete business structure once perps is included.

Min Lin described this as “Wall Street 2.0” in his interview with Exilist.

“Ondo has a theme around Wall Street 2.0. A lot of that is looking at how we reinvent what already works very well in its traditional form and bring it onchain. The ultimate vision for Ondo is to build an onchain prime brokerage platform.” — Min Lin, MD of Global Business Development, Ondo Finance

The core of Ondo, as examined in this report, is not tokenization itself. It is increasing the capital velocity of the assets it issues.

Ondo’s Treasury products created a foundation of stable onchain cash and operational infrastructure. Tokenized stocks expanded its global distribution network. Perps turn those stocks into collateral and hedging capital. Ondo Network provides the execution layer for these transactions, while Oasis Pro, Broadridge, and DTCC connect the system with regulated U.S. markets. Ondo’s ecosystem and infrastructure lie not in any single product, but in the way these components connect.

1. A Capital Markets Operating System Built on U.S. Treasuries

Ondo began in 2021 with DeFi structured products, including Ondo Vaults and Liquidity-as-a-Service. It discontinued those businesses when yields within crypto declined in 2022 and shifted its focus to OUSG and USDY.

This was not merely a decision to pursue higher yields through U.S. Treasuries. It was a decision to address four operational problems that any onchain capital markets platform must solve.

• First is custody of the underlying assets. The number of tokens onchain must match the offchain Treasury securities and fund shares backing them.

• Second is minting and redemption. When users enter and exit with stablecoins, the platform must absorb the operating hours and settlement cycles of traditional financial institutions.

• Third is rights and regulation. The platform must define who may purchase the product, what claims holders have, and where the responsibilities of the issuer and service providers begin and end.

• Fourth is distribution. The same asset must be delivered across multiple chains, wallets, and institutional channels rather than being sold through a single web application.

OUSG provides Qualified Purchasers with exposure to the yield of short-term U.S. Treasuries and institutional money market products, while supporting 24/7 instant subscriptions and redemptions with USDC, PYUSD, and RLUSD.

USDY allows qualifying non-U.S. investors to hold and transfer a yield-bearing, U.S. dollar-denominated tokenized note secured by short-term U.S. Treasuries, short-duration Treasury ETFs, or bank deposits. According to Ondo, USDY had grown to $2.15 billion and had been deployed across 12 networks as of August 2026.

The system built while operating only one or two Treasury products became more valuable when Ondo expanded into tokenized stocks. Every stock has different prices, dividends, stock splits, trading halts, and market hours. Ondo Stocks was able to scale rapidly to hundreds of assets not because Ondo suddenly invented stock-tokenization technology in 2025, but because it had already built a supply chain for custody, reconciliation, minting, redemption, and distribution through its Treasury business.

The move from Treasuries to stocks was therefore not product diversification. It was the replication of an operating system proven with one asset across hundreds of assets. This became the first foundation for Ondo’s expansion from an RWA project into capital markets infrastructure.

2. The Competitive Advantage of Tokenized Stocks Is Built After Issuance

Ondo Stocks launched in September 2025 with more than 100 U.S. stocks and ETFs.

As of August 2026, the platform supported more than 440 stocks, ETFs, and commodity-linked products. According to Ondo, Ondo Stocks had reached $1.01 billion in TVL, $27 billion in cumulative trading volume, and 186,636 cumulative holders.

Of that volume, $18 billion was generated on centralized exchanges, while $206 million in Ondo assets was held across Binance, Gate, Bitget, and MEXC.

The growth of Ondo Stocks was not generated by its own application alone. Ondo distributed its assets across centralized exchanges; wallets such as MetaMask, Ledger, and Binance Wallet; and onchain trading routes such as Uniswap, 1inch, and LI.FI. The platform began on Ethereum, expanded to BNB Chain and Solana, and enabled certain assets to move to HyperEVM.

Ondo’s customers are not limited to end investors. They also include exchanges, wallets, fintech platforms, custodians, and protocols that want to offer stock products through their own interfaces.

This makes Ondo Stocks closer to B2B2C distribution infrastructure than a B2C brokerage application. The objective is for issuance, redemption, and collateral-management rails to connect back to Ondo regardless of the interface through which the end user places an order. Rather than controlling the customer relationship exclusively, Ondo aims to become the default provider across as many interfaces as possible.

2.1 Minting and Redemption Matter More Than the Token

The same Apple or NVIDIA stock can be tokenized by multiple issuers. Once their asset lists become similar, differentiation shifts away from the token itself and toward the primary market.

Ondo uses a Just-in-Time Liquidity model that accesses underlying-market liquidity when an order is placed. When a purchase request is received, the underlying stock or ETF is acquired and the token is minted. When a redemption request is received, the token is burned and the underlying value is paid in USDon or USDC.

Rather than pre-positioning inventory in shallow onchain pools, the model enables Ondo Stocks to inherit liquidity from traditional markets, reducing slippage and price dislocation.

It is important to distinguish 24/7 trading from 24/7 minting and redemption. Secondary trading on a DEX or CEX can remain open over the weekend. But if the primary market that creates new tokens and redeems them for their underlying value is closed, arbitrage becomes constrained and the token price can diverge from the underlying stock.

In June 2026, Ondo introduced instant 24/7 minting and redemption for six tokens tracking SPY, QQQ, Circle, NVIDIA, Tesla, and Alphabet. The scope was later expanded to more than 25 assets, including major technology stocks, semiconductor stocks, and index ETFs.

The remaining Ondo Stocks generally support 24/5 minting and redemption, while all assets can be transferred 24/7 in eligible jurisdictions.

The value of this function is less about the convenience of being able to buy at any time and more about minimizing price dislocation.

When news breaks over the weekend, spot-like tokens and perps can lead price discovery, while minting and redemption connect those prices with the expected value of the underlying assets. However, because Nasdaq and NYSE liquidity cannot be accessed immediately while U.S. cash markets are closed, spreads, price dislocations, and hedging costs may increase.

The purpose of 24/7 operations is not to eliminate liquidity risk. It is to bring that risk within Ondo’s pricing, inventory, and limit-management systems.

2.2 What Token Holders Actually Own

The standard Ondo Stocks distributed outside the United States are not the underlying shares themselves. They are structured notes issued by Ondo Global Markets (BVI) Limited and designed as total return trackers for the underlying stocks and ETFs.

Each token is fully backed by the underlying securities and cash in transit. Dividends are reinvested into the underlying stock after applicable withholding taxes, while corporate actions such as stock splits are reflected in the economic value of the product.

Holders receive economic exposure comprising price changes and reinvested dividends. They are not directly recorded as shareholders on the share register of the underlying company.

The issuer of Ondo Stocks is an SPV separate from Ondo Finance, and the underlying assets are held with a U.S.-registered custodian broker-dealer. Ankura Trust Company verifies the existence and quantity of the underlying securities each business day and holds a first-priority security interest over the assets securing the issuer’s obligations. The underlying securities are not lent without the explicit consent of the relevant holder.

The recent Broadridge integration is designed to allow holders to express preferences regarding how the underlying shares should be voted. However, this is not equivalent to the legal voting rights exercised by a direct shareholder.

This legal structure has enabled Ondo to expand rapidly, but it also creates a long-term weakness. Tokens can be distributed quickly, while platforms such as Dinari, Securitize, and Superstate can make the completeness of shareholder rights a separate axis of competition through direct shareholder rights or issuer-led native equities.

3. Issued Assets Need Markets That Put Them to Work

To understand Ondo Perps, the relevant question is not, “Why is an RWA issuer operating a derivatives platform?” It is, “What is missing when the business stops at spot issuance?”

A spot-token issuer bears the cost of custody, purchases and sales, reconciliation, corporate actions, minting, and redemption. But when users repeatedly trade the issued tokens on exchanges, the order flow, trading revenue, and customer data accumulate at the exchange.

The issuer creates the asset inventory, while the distributor owns the asset’s velocity. As more providers issue Apple tokens, the margins and brand value attached to issuance itself may weaken.

Perps change this economic structure. Perpetuals allow investors to trade long and short exposure with leverage without directly holding the spot asset, resulting in much higher trading frequency than spot markets. If the issuer operates or deeply integrates this layer, it can move beyond being a token provider and become trading and risk-management infrastructure.

This does not mean every tokenized-stock issuer must legally operate its own derivatives platform. But a company seeking to become a capital markets platform must own the derivatives and margin layer or integrate it deeply enough to retain meaningful control. Otherwise, it gives other exchanges the most active use cases and economic value generated by the assets it issues.

Through Ondo Perps, which is operated by a separate legal entity, Ondo has chosen to build this layer directly.

First, Capital Remains Idle in a Spot-Only Market

If an investor holding stocks can use only stablecoins as margin for another position, capital becomes tied up twice. An investor holding $100,000 in Apple tokens may need to provide an additional $100,000 in stablecoins to open a perps position for hedging. When the spot asset and margin are separated, the tokenized stock remains merely an asset to be held.

Ondo Perps accepts Ondo Stocks as collateral. Users can hedge or open positions in other assets without selling their spot holdings. They can, for example, use tokenized Tesla stock as collateral to trade NVIDIA perps. The moment a spot asset becomes purchasing power, the same pool of capital can support both the underlying position and additional trading activity.

Second, Separating Spot and Derivatives Increases Hedging Costs

When spot assets are held on one platform and perps are traded on another, investors must move assets, prepare separate collateral, and manage different liquidation rules. Market makers must also manage spot inventory and perps positions separately, increasing their cost of capital. Those costs ultimately appear as thinner order books and wider spreads.

Bringing Ondo Stocks and perps into the same environment allows users to retain spot exposure while opening an offsetting perps position. Basis trades, market-neutral strategies, and portfolio hedges can be executed through a shorter path. From the issuer’s perspective, spot holders can become natural providers of derivatives liquidity.

Third, Perps Provide Price Discovery for 24/7 Spot Markets

Corporate news and policy changes occur even while U.S. cash markets are closed. Because perps trade around the clock without expiration, they can reflect price expectations during nights and weekends before the underlying market reopens. When combined with 24/7 minting and redemption, these prices can also inform the pricing and inventory management of spot-like tokens.

“As we add more assets to 24/7 operations, people are able to hedge their positions around the clock and react to market news at all times. From a price-discovery standpoint, we believe this will eventually start moving onchain as well, similar to how perpetual futures have led price discovery over the weekend.” — Min Lin, MD of Global Business Development, Ondo Finance

Without perps, a 24/7 spot token can easily become an isolated secondary-market instrument trading on top of a closed underlying market. When both spot and perps remain open, price discovery, arbitrage, and hedging reinforce one another. It is difficult to view Ondo’s expansion of 24/7 minting and redemption and the launch of Ondo Perps at roughly the same time as a coincidence.

Fourth, Managing Corporate Actions and Liquidations Requires Issuer Data

Equity perps are more complex than crypto perps. Dividends, stock splits, mergers and acquisitions, trading halts, and delistings affect spot prices, funding, and contract specifications. If these events are handled inaccurately, perps prices can diverge from the underlying stocks and create unexpected basis risk for market makers and investors.

Ondo already manages corporate actions and underlying-asset inventory through the spot issuance process. Connecting this information with the pricing, funding, and liquidation systems of perps can allow risks to be reflected more quickly than on a general-purpose derivatives platform.

Because the minting and redemption of Ondo Stocks can access Nasdaq and NYSE liquidity, the system may also provide a route to the underlying-market liquidity required during large liquidations. The strongest rationale for connecting spot issuance with perps is not marketing. It is the integration of risk management.

Ondo Perps is therefore not an ancillary feature of tokenized stocks. It changes a structure in which the issuer bears the cost of inventory while giving away the economics of trading. It represents the stage at which static TVL is transformed into repeatedly deployed capital.

4. Ondo Perps: Turning Static Holdings into Productive Capital

For tokenized stocks to become more useful than traditional stocks, transferability between wallets is not enough. Holders must be able to borrow against their assets, hedge downside risk, and use them as margin for trading other assets.

What matters is not merely that an asset exists onchain, but how often it can be put to work.

Ondo Perps is a capital-efficient platform for equity, ETF, and commodity perpetual futures that launched in July 2026 for global non-U.S. users, subject to jurisdictional and other restrictions. It offers 24/7 trading with up to 20x leverage. Its primary markets are not crypto assets, but stocks such as Apple, NVIDIA, Tesla, Amazon, and Microsoft; ETFs such as QQQ, IVV, and VTI; and markets linked to gold, silver, and other commodities.

At first glance, it may not appear very different from existing equity perps platforms. But its core value is neither the number of supported markets nor the leverage multiple. It lies in connecting Ondo Stocks to the derivatives collateral layer and enabling spot and perps positions to be managed within the same portfolio.

On a conventional platform, an investor who already holds stocks must keep those stocks in place while depositing separate stablecoin margin to trade perps. Even if the investor holds sufficient assets, those assets remain outside the trading account, and additional capital is required to open a new position.

Ondo describes Productive Capital as the ability to use tokenized stocks as margin without selling them. A spot asset moves from being a static holding to productive capital supporting new positions.

In simple terms, a user could post Apple as collateral and short Microsoft.

The effect of this structure is potentially more significant for market makers providing liquidity to equity perps than it is for ordinary investors.

When a market maker fills a sell order in NVIDIA perps on a conventional platform, it must purchase NVIDIA shares through a traditional brokerage account to hedge the risk of a price increase. At the same time, it must deposit separate stablecoins as margin on the perps platform. Capital becomes tied up in both the spot hedge and derivatives margin to manage a single economic exposure.

On Ondo Perps, tokenized stocks can serve as both spot hedges and multi-asset collateral. A market maker can purchase tokenized NVIDIA stock to hedge a short perps position while using the same token as productive margin supporting other positions within the portfolio.

Ondo explains that under the conventional structure, providing $1 million of perps liquidity may require approximately $2 million across the spot hedge and margin. With tokenized-stock collateral, the same exposure could be supported with capital closer to $1 million. According to Ondo’s estimate, this can provide up to approximately 2x capital efficiency.

However, this should be understood as a theoretical maximum that varies with the market-making strategy, collateral haircuts, correlations between positions, and volatility.

Portfolio margin adds another layer. Portfolio margin calculates margin requirements based on the net risk of the overall portfolio rather than evaluating each position in isolation. For example, if a trader holds tokenized NVIDIA stock and a short position in NVIDIA perps, the margin model can account for the degree to which the two risks offset each other. Capital is allocated against the remaining net risk rather than requiring margin based on the gross notional value of all spot and perps positions.

Lower capital requirements can turn the same trading revenue into a higher return on capital. This can encourage market makers to deploy more capital, increasing order sizes, tightening spreads, and reducing slippage. A better trading environment attracts more traders, while additional order flow can further improve market-maker economics.

This is why tokenized-stock collateral can operate as a liquidity flywheel rather than merely another margin option.

But capital efficiency does not emerge automatically simply because spot and derivatives are placed in the same account. Tokenized stocks used as collateral must be tradable at low cost.

If spot liquidity is insufficient, it becomes more expensive for market makers to establish or unwind their hedges. If token prices diverge materially from the underlying stocks or redemptions do not operate smoothly, the costs of hedging and liquidation may exceed the capital saved through collateral integration.

This is where the minting and redemption structure of Ondo Stocks becomes a competitive advantage for Ondo Perps. Market makers do not need to rely solely on onchain order books for tokenized stocks. Through minting and redemption, they can draw on the real liquidity of the underlying markets on Nasdaq and NYSE.

The significance of combining Ondo Stocks with Ondo Perps does not lie in cross-selling products. It lies in Ondo’s ability to directly provide the hedging assets and liquidity routes required by the derivatives market.

The success of Ondo Perps therefore depends not on how quickly more than 440 Ondo Stocks are added as collateral, but on whether Ondo can expand the collateral set while increasing the share of Ondo Stocks in total collateral and maintaining market stability.

Initial performance has been relatively strong. By August 26, 2026, Ondo Perps had surpassed $10 billion in cumulative trading volume. This demonstrates that the product has moved beyond the announcement stage and generated real trading activity.

Open interest has also trended upward since launch. Trailing 30-day trading volume of $5 billion equates to average daily volume of approximately $167 million. Compared with open interest of approximately $100 million, average daily volume was about 1.67 times reported open interest. This indicates active capital turnover in the perps market and clearly shows that trading activity on the newly launched platform has moved beyond the announcement or testing stage.

At the same time, open interest of approximately $100 million shows that the base of risk capital remaining on the platform is still at an early stage. High cumulative volume can grow rapidly through repeated market-maker trading, incentives, and short-term position turnover. It is therefore too early to conclude from $10 billion in cumulative volume alone that a deep and stable derivatives market has been established.

The following indicators will require continued monitoring:

• Whether open interest is sustained and continues to increase after launch

• The share of Ondo Stocks in total collateral, including stablecoins

• The number of Ondo Stocks supported as collateral

• Whether spreads, market depth, and funding remain stable across major markets

• How basis behaves relative to spot markets during weekends and corporate actions

• How liquidation losses, insurance, and loss-sharing mechanisms perform during sharp market moves

• Whether trading volume is concentrated among specific market makers or a small number of accounts

The collateral usage rate of Ondo Stocks is particularly important in determining the identity of Ondo Perps.

If most trading is collateralized by stablecoins, Ondo Perps may be a rapidly growing equity derivatives platform, but it will not yet have validated the onchain prime brokerage model built around Ondo Stocks.

If tokenized stocks are actually used as collateral and spot holders repeatedly execute hedges, basis trades, and cross-asset positions, Ondo’s concept of Productive Capital will move beyond a marketing term and become a functioning capital structure.

The legal and operating structures must also be distinguished. Ondo Perps is offered to eligible non-U.S. users by Ondo Global Panama Inc. According to its official disclosures, neither the platform nor its derivatives contracts are registered with the SEC, the CFTC, Panama’s securities regulator, or any other regulatory authority. Trading takes place through peer-to-peer smart contracts between users.

The service is not available in restricted jurisdictions, including the United States, Panama, and Canada. Even though Ondo Finance developed the technology and the products are connected within the Ondo ecosystem, the regulatory responsibilities of the Ondo Stocks issuer, Ondo Finance, Oasis Pro, and the operator of Ondo Perps should not be treated as one and the same.

The initial performance of Ondo Perps ultimately demonstrates two things. Demand exists for 24/7 trading in stocks, ETFs, and commodities, and Ondo generated substantial trading activity within a short period.

What Ondo must ultimately prove, however, is not volume. It must demonstrate that tokenized stocks are used as collateral, that this collateral lowers the cost of capital for market makers, and that lower capital costs return to the market as deeper liquidity.

When that cycle is established, Ondo Stocks move from digital stocks held in a wallet to productive financial capital used across the market. That is why Ondo Perps matters.

5. The Capital Flywheel Designed by Ondo

The synergy between Ondo Stocks and Ondo Perps is not simply that one ecosystem offers both spot and derivatives. What matters is whether activity on one side improves the quality of and demand for the other.

The first link is between issuance and collateral. As the TVL of Ondo Stocks increases, the inventory of equity collateral available for use on perps also grows. Existing holders gain more reasons to retain the tokens because they can hedge, use leverage, and execute relative-value trades without selling their assets.

The second link is between collateral and trading volume. Once stock tokens are accepted as margin, the need for separate stablecoin collateral declines and the return on capital for market makers and professional traders can increase. As these participants provide more orders, spreads and market depth on perps may improve.

The third link is between perps and spot liquidity. perps traders buy and sell spot Ondo Stocks and use minting and redemption to hedge their positions. If perps volume generates spot orders and arbitrage activity, both the issuance and turnover of Ondo Stocks can increase. Spot becomes the underlying asset for Perps, while Perps become an additional source of demand for spot.

The fourth link is between price discovery and liquidation. Perps provide an expected price while traditional markets are closed, and 24/7 minting and redemption of Ondo Stocks transmit that price to spot-like tokens. When traditional markets reopen, the Just-in-Time Liquidity model reconnects prices with Nasdaq and NYSE.

At the same time, spot minting and redemption rails provide an exit route through which perps liquidators and market makers can reduce risk.

The fifth link is between portfolio margin and customer retention. The more a single account can recognize offsetting relationships among multiple spot and perps positions, the less incentive users have to move their capital to another platform. Switching costs arise not from the brand of an individual token, but from the integrated collateral and risk-management system. This is the economics of prime brokerage.

“In traditional brokerage accounts, stocks are essentially inert. With tokenized stocks, you can use them as collateral or margin, and in lending and borrowing protocols. There is much more you can do with the tokenized version.” — Min Lin, MD of Global Business Development, Ondo Finance

If this flywheel succeeds, the competitive advantage of Ondo Stocks will come less from the fact that they were issued by Ondo and more from the range of activities they can support within the Ondo ecosystem.

Even if the economic exposure of an Apple token is similar across providers, users have a reason to choose Ondo’s version if it offers lower collateral costs, deeper hedging markets, and faster minting and redemption.

The synergy is not automatic. If perps volume depends on subsidies to external market makers, usage of Ondo Stocks as collateral remains low, or spot and perps prices diverge materially, the two products will remain separate services under the same brand.

The flywheel must be demonstrated through collateral composition, order flow, spreads, and liquidation data rather than through a list of products.

6. Connecting Execution, Settlement, and Regulation

Ondo announced Ondo Chain, an RWA-focused Layer 1, in 2025. The general-purpose L1 was not launched in its original form. In July 2026, the follow-on strategy evolved into Ondo Network, which separates trade execution from asset settlement.

Ondo has explained that, through building Ondo Perps and discussions with institutions and market makers, it came to see the real bottleneck not as the blockchain layer that records ownership, but as the execution layer responsible for high-speed order matching, margin management, and liquidations.

Public blockchains are effective at transparently recording ownership and settlement. However, an architecture in which every node replicates the entire state can be disadvantageous for high-speed order matching and trade privacy.

Ondo Network is the execution layer for a new generation of financial markets. It processes order matching, margin, and liquidations quickly and privately within Trusted Execution Environments. A decentralized set of attestors cryptographically ensures that only approved code is running before final asset transfers and settlement are recorded on public blockchains.

The shift from Ondo Chain to Ondo Network means more than a change in the technical roadmap. It indicates that Ondo came to prioritize an execution layer capable of processing spot, perps, and collateral through a single risk engine over building a general-purpose “chain for RWAs.” Without perps, the need for this redesign would have been less compelling.

The importance of perps is also evident in Ondo’s U.S. regulatory strategy. In August 2026, Ondo Finance and Oasis Pro submitted two comment letters to the SEC and CFTC.

The first argues that cash-settled perpetual futures based on single stocks can be addressed within the existing category of a “security futures product.” Rather than creating an entirely new product category simply because the contract has no expiration date, Ondo proposes bringing these products into the United States under the existing Commodity Futures Modernization Act and notice-registration regime.

The second letter asks regulators to recognize offsetting relationships between spot stocks and perps, correlations across securities, and intraday settlement when calculating margin.

It proposes extending collateral principles already applied to tokenized Treasuries, money market funds, and corporate bonds to tokenized stocks, while recognizing portfolio margin and cross-margining between spot and derivatives.

These two documents provide some of the strongest evidence that Ondo Perps is not an experimental side project. The ultimate product Ondo wants to build in the United States is not limited to a spot market for tokenized stocks.

The structure points toward combining Oasis Pro’s broker-dealer, ATS, and transfer-agent infrastructure; the existing securities rails of DTCC and Broadridge; tokenized-stock collateral; equity perps; and portfolio margin within a regulated account structure.

This does not mean that U.S. investors can currently access such an integrated service. The SEC and CFTC comment letters are proposals, and U.S. custody-based tokens have different rights from Ondo Stocks offered outside the United States.

What is clear, however, is that the regulatory discussion is moving from whether tokens should be permitted to how spot assets, derivatives, and collateral should be integrated within a margin framework. Ondo’s intended transition from issuer to prime brokerage is consistent across both its products and its regulatory submissions.

7. The Major Competitive Models in Tokenized Equities

As of August 31, 2026, RWA.xyz measured the tokenized-stock market at $2.53 billion in distributed asset value.

Ondo ranked first among issuance platforms by distributed asset value, but the market combines businesses with different legal structures and operating models.

By the numbers, Ondo’s closest competitor is xStocks. By business model, the market divides into four broad categories.

• Ondo and xStocks compete through open issuance and distribution networks.

• bStocks and Robinhood vertically integrate issuance with their exchange or brokerage customer relationships.

• Dinari, Securitize, and Superstate emphasize regulated rights and native equities.

• Coinbase and Centrifuge combine the distribution power of a large platform with specialized tokenization infrastructure.

7.1 xStocks: Ondo’s Closest Competitor—and a Platform Pursuing a Similar Blueprint

xStocks distributes 1:1-backed stock and ETF tokens issued by Backed Assets (JE) Limited through Kraken and a range of exchanges, wallets, and DeFi protocols. According to RWA.xyz, xStocks had 715 assets—more than Ondo—and $606.6 million in distributed asset value.

According to xStocks, cumulative trading volume reached $35 billion in July 2026, including $12.5 billion in onchain volume. It had approximately 200,000 holders, more than 100 partners, and support across seven chains.

The strength of xStocks is its open distribution standard. Rather than keeping assets within a single application, it allows the same assets to move across multiple chains and interfaces. This is where it overlaps most directly with Ondo.

Payward is also developing a transition gateway connecting Nasdaq and regulated securities markets with permissionless DeFi. It has disclosed plans to use xStocks across collateral, cross-margining, derivatives, and perps, while expanded 24/7 liquidity and RFQ functionality are included in the roadmap.

This demonstrates that Ondo Perps’ first-mover advantage is not a permanent monopoly. If xStocks completes its own collateral and derivatives ecosystem alongside the Nasdaq connection, it will compete with Ondo across almost the same dimensions.

Ondo’s current advantage is that it has already brought spot-token collateral, perps, and portfolio margin into an operating product. Defending this position will require more than having launched first. Ondo must build a record of actual collateral usage, tighter spreads, growing open interest, and reliable liquidation performance.

7.2 bStocks: Evidence That Distribution Can Matter More Than Asset Count

bStocks are tokenized securities issued by Binance-affiliated BTECH Holdings Limited and backed 1:1 by U.S. stocks held with regulated custodians. Holders do not directly own the underlying shares, but the tokens can be withdrawn to BNB Smart Chain wallets and used in DeFi.

Binance provides 24/7 spot trading, instant conversion, proof of reserves, automatic dividend reinvestment, and adjustments for stock splits. The products trade on recognized exchanges under an approved prospectus within the ADGM framework.

The most important competitive figure is 68. According to RWA.xyz, bStocks reached $593.8 million in distributed asset value with only 68 assets, narrowing the value gap with xStocks—which offered 715 assets—to approximately $13 million.

This suggests that a small number of popular assets combined with powerful exchange distribution can attract capital more quickly than a long catalog of hundreds of securities.

Within Binance, Ondo cannot become a stronger distributor than Binance itself. Instead, it must offer neutral issuance and redemption rails that work across multiple exchanges, wallets, and chains, along with greater capital utility.

Even when an exchange prioritizes its own tokens, the reasons for users to seek out Ondo Stocks must be perps collateral, lending, broader external distribution, and the quality of minting and redemption.

7.3 Robinhood: Limited Openness, but Ownership of the Customer Relationship

Robinhood Europe offers more than 2,000 Classic Stock Tokens. These are derivative contracts between Robinhood and its users and do not grant direct rights in the underlying shares.

Trading is available 24/5 from as little as €1. The tokens currently cannot be transferred to external wallets or platforms. Robinhood owns the underlying assets, which are held with licensed U.S. institutions.

From the perspective of onchain openness, Ondo has the advantage. But Robinhood combines an existing customer base, an intuitive application, payments, and asset management within a single interface.

In addition to Stock Tokens, Robinhood Europe offers 24/7 perps on ETFs, commodities, currencies, and crypto with up to 10x leverage. Its official materials do not currently state that Classic Stock Tokens can be used as collateral for perps. Even so, the direction of offering spot-like products and derivatives through one brokerage application supports Ondo’s full-stack thesis.

Robinhood’s competitive threat is not the protocol. It is ownership of the user relationship. Most investors may choose a familiar application, low minimums, and simplified tax and corporate-action processing over external transferability and DeFi utility.

Ondo must respond through a B2B2C strategy that encourages third-party applications to adopt its assets and risk engine, rather than attempting to compete solely on the user experience of its own application.

7.4 Dinari: The Threat Lies Less in Current Scale Than in Rights and U.S. Access

In August 2026, Dinari began offering 724 dShares to eligible U.S. investors and businesses, including the entire S&P 500. The assets can be purchased with USDC through self-custodial wallets.

Dinari states that it provides NBBO execution, voting rights, cash dividends, corporate actions, and protected claims on the underlying securities. It also operates a B2B API through which broker-dealers, banks, and fintech platforms can offer tokenized securities.

RWA.xyz measured Dinari’s distributed asset value at $10.5 million, leaving it well behind Ondo in current scale. But Dinari’s threat lies not in its current liquidity. It lies in the completeness of its rights and its ability to serve the U.S. market.

Whereas Ondo’s international tokens use a total-return tracking structure, Dinari emphasizes a custody-based model designed to preserve the rights and protections associated with traditional stock ownership. It also connects more than 85 jurisdictions with the United States and allows external financial institutions to offer the products under their own brands.

If Dinari implements the 24/7 trading, T+0 settlement, collateralized lending, and margin capabilities it has announced, it will target both Ondo’s open distribution and utility model and the rights offered through regulated U.S. securities.

The difference in current scale remains substantial, but strategically, Dinari is the regulated competitor that warrants the closest attention.

7.5 Securitize and Superstate: Bringing Actual Shares Onchain, Not Wrappers

Securitize and Superstate compete from a different direction than businesses that rapidly wrap hundreds of existing stocks.

Securitize operates SEC-registered broker-dealer, ATS, transfer-agent, and fund-administration infrastructure. In July 2026, it tokenized its own stock, SECZ, on Avalanche and Solana at the time of its NYSE listing.

The company describes the structure not as an offshore synthetic token or wrapper, but as the same common stock brought onchain directly by the issuer. The reason three assets alone accounted for $272.7 million on RWA.xyz is that Securitize focuses on actual issuer shares and institutional assets rather than a large catalog of securities.

Superstate Opening Bell also works directly with issuers as an SEC-registered transfer agent. Its tokenized shares are not derivatives, wrappers, or separate classes of stock. Superstate maintains the shareholder register across both onchain and book-entry records.

Shares can move between KYC-verified wallets, while issuers can process dividends, stock splits, new issuance, and stablecoin-based capital formation.

This model offers the most complete set of rights, but it is more difficult to scale quickly. Each listed company must cooperate, while transfer-agent, disclosure, and distribution structures must be established separately. This makes it difficult to list hundreds of popular stocks at once.

Over the long term, however, if listed companies begin issuing native onchain shares from the outset, demand for total-return wrappers could decline.

Ondo’s U.S. custody-based tokens, collaborations with DTCC and Broadridge, and acquisition of Oasis Pro are responses to this direction. Ondo is pursuing rapid wrapper-based distribution internationally while developing a parallel U.S. path that more closely aligns with actual securities rights and existing market infrastructure.

7.6 Coinbase and Centrifuge: Exchanges Can Build Infrastructure Alliances Instead of Issuing Directly

In May 2026, Coinbase designated Centrifuge as its Preferred Tokenization Infrastructure platform and made a strategic investment.

Centrifuge contributes its experience structuring assets with Apollo, Janus Henderson, and S&P Dow Jones. Coinbase contributes consumer distribution, institutional relationships, and its developer ecosystem.

The first asset, deSPXA, provides eligible non-U.S. investors with tokenized exposure to an S&P 500-linked fund managed by Janus Henderson.

This demonstrates that major centralized exchanges do not necessarily need to adopt Ondo or xStocks, nor do they need to issue tokens directly. An exchange can partner with external tokenization infrastructure to build an asset supply chain tailored to its own blockchain and customers.

Ondo’s neutral distribution strategy must provide faster integration, deeper liquidity, and more utility than these alliances.

What the Competitive Landscape Means for Ondo

Ondo currently presents one of the most complete models combining open global distribution, instant minting and redemption, tokenized-stock collateral, and its own perps platform.

A major strength is that Ondo established an integrated risk-management structure connecting spot issuance, traditional-market liquidity, perps, and portfolio margin.

However, it faces pressure from three directions.

• Binance and Robinhood own the customer relationship and trading interface.

• Dinari, Securitize, and Superstate are strengthening direct rights to underlying shares and regulated infrastructure.

• xStocks is pursuing a similar open distribution model and expanding toward collateral and perps.

Ondo’s moat therefore cannot be defined by asset count or TVL alone. Its capital efficiency and liquidity must become strong enough that exchanges want to connect Ondo’s minting, redemption, collateral, and perps rails even when they have their own tokens.

The difficult component for competitors to replicate is not an Apple token. It is the entire path through which that token moves from issuance to collateral, hedging, liquidation, and settlement.

8. From Exporting U.S. Assets to Building a Two-Way Global Market

Ondo’s international strategy should also be viewed through the lens of perps and capital utility. Selling U.S. stocks around the world is not enough to create a global securities network.

Assets from individual regions must be placed on Ondo’s distribution, collateral, and trading rails and made available to investors globally.

Ondo and Mirae Asset Global Investments signed an MOU to tokenize ten U.S.-listed Global X ETFs. The initial scope is not Korean equities, but U.S.-listed ETFs. Mirae Asset manages the products, while Ondo is responsible for tokenization and global digital distribution.

With SBI Group, Ondo is pursuing the onchain issuance and distribution of Japanese equities, the distribution of Ondo assets through SBI channels, and the use of JPYSC for settlement and collateral.

Specific securities and launch dates have not yet been disclosed. These initiatives should therefore be viewed as supply-chain development rather than commercial results already achieved.

“Similar to how the U.S. has used U.S. Treasuries and the U.S. dollar to attract capital, and how stablecoins have unlocked global access to U.S. dollars, tokenized equities can do the same for local stocks by exporting them beyond their home markets.” — Min Lin, MD of Global Business Development, Ondo Finance

Tokenizing Korean or Japanese stocks alone will not create global demand. Investors must be able to trade outside local market hours, hedge both currency and equity risk, and use their holdings as collateral.

Ondo will become a genuine two-way distribution network only when the spot, perps, and collateral structure developed for U.S. equities is also applied to local-market assets.

This is where perps also connect with Ondo’s Asia strategy. The thinner the liquidity of local equities relative to U.S. mega-cap stocks, and the more fragmented their trading hours, the more important hedging, portfolio margin, and 24/7 risk-management tools become for global market makers.

Ondo can offer greater value to its partners if it moves beyond issuance agreements with asset managers and provides a global market for transferring risk in those assets.

9. What Ondo Must Prove Next

Ondo is already a leading RWA project and one of the leading platforms in tokenized equities. If its future is assessed solely through TVL and asset count, both the company’s most important transformation and its greatest risks will be missed.

The first metric to watch is the collateral usage rate of Ondo Stocks. It will be necessary to measure how much tokenized stock is actually used as collateral across Morpho lending markets and Ondo Perps, whether collateral remains concentrated in a few index ETFs, and whether it expands across a broader range of individual equities.

The second is the amount of durable risk capital remaining on Ondo Perps. More important than cumulative volume are the retention of open interest, repeat traders, market-maker concentration, spreads, and market depth. The $10 billion in cumulative volume represents a strong start, but the more important question is whether open interest of approximately $100 million continues to grow and remains durable over time.

The third is the quality of the price connection between spot and perps. Basis and funding behavior during weekends and corporate actions must be monitored, along with whether 24/7 minting and redemption limits continue to function during volatile markets. The benefit of integrating spot and perps will be demonstrated not through the user interface during normal conditions, but through volatility and liquidation events.

The fourth is the defensibility of Ondo’s neutral distribution network. Even if Binance prioritizes bStocks and Kraken prioritizes xStocks, third-party exchanges and wallets must continue adopting Ondo. If Ondo assets are used more broadly across collateral, lending, and derivatives than competing products, Ondo can turn the absence of a dominant proprietary exchange into a network effect.

The fifth is convergence across rights and regulatory pathways. International total-return tracking tokens, EEA prospectus-based products, securities admitted to trading under the ADGM framework, and U.S. custody-based tokens provide different rights. How closely Ondo can ultimately align the direct rights of its U.S. products with the transferability of its international products will determine its competitive position against Dinari, Securitize, and Superstate.

The sixth is the verifiability of Ondo Network. The need for high-speed execution and privacy is clear. However, the initial architecture’s dependence on TEEs and a limited set of attestors creates centralization, hardware, and key-management risks. The number and independence of attestors, failure recovery, emergency-stop authority, and the scope of state recorded on public blockchains must be publicly verifiable.

A full-stack structure can become both a moat and a network through which risk propagates. An error in a token price can trigger cascading liquidations across lending and perps. Problems involving offchain custody or corporate actions can affect the value of onchain collateral.

For these products to reinforce one another, the legal entities, collateral pools, and risk engines must be separated and transparently verified so that a failure in one layer does not destabilize the entire market.

10. Conclusion: After Tokenization, How Much Capital Stays?

The easiest way to evaluate an RWA project has been to look at the number of assets tokenized and its TVL. But these metrics reveal the scale of an issuer without fully explaining its competitiveness as a capital markets platform.

A more important metric going forward is Capital Velocity: the extent to which issued assets are repeatedly used across collateral, lending, hedging, and trading.

If $1 billion in tokenized stocks simply remains in wallets, Ondo’s revenue opportunities are limited to issuance, redemption, and distribution fees. If the same $1 billion is used as lending collateral, supports perps positions, and repeatedly serves as a hedging asset for market makers, trading activity and revenue can continue to increase even without a substantial rise in TVL.

Ondo’s growth formula is shifting from issuing more assets to enabling more use of the assets it has already issued.

Min Lin described Ondo’s ultimate direction in his interview with Exilist.

“The ultimate vision for Ondo is to build an onchain prime brokerage platform.” — Min Lin, MD of Global Business Development, Ondo Finance

Prime brokerage is not a single product. It is an account structure through which institutions and professional investors custody assets, deploy collateral, obtain leverage, trade spot and derivatives, and manage risk across an entire portfolio.

From this perspective, the logic behind Ondo’s expansion becomes clear: from Treasuries to equities, from spot to lending and perps, and then to portfolio margin and a proprietary trading network. These are not disconnected businesses. They are components of an account structure designed to keep capital within the Ondo ecosystem.

Even if Ondo Stocks supplies the assets, the most active trading and fee generation will accrue to external platforms if investors must move elsewhere to hedge.

If investors can borrow against Ondo Stocks, retain their spot exposure while hedging through Ondo Perps, and manage the entire portfolio under a single margin system, issuance, trading, and risk management can remain within one environment.

The importance of Ondo Perps therefore does not lie in cumulative trading volume alone. Perps are the first test of whether Ondo can transform the assets it issues into productive capital.

If Ondo Perps volume grows but remains concentrated in stablecoin collateral and short-term turnover, Ondo may be viewed as an RWA platform that also operates an equity derivatives venue.

If the share of Ondo Stocks used as collateral increases alongside open interest, and spot holders repeatedly participate in lending, hedging, and basis trades, Ondo will move closer to becoming a functioning onchain prime brokerage rather than remaining a tokenized-asset issuer.

The most important indicators are therefore not asset count but the collateral usage rate of Ondo Stocks, and not cumulative volume but the open interest that remains on the platform.

What matters is whether the same assets are repeatedly used across Morpho and Ondo Perps, and whether market makers begin moving the hedging assets and margin currently held in traditional brokerage accounts into the Ondo ecosystem.

If these indicators improve, Ondo’s true competitive advantage will no longer come from tokenization technology or the length of its asset list. It will come from an account structure that allows investors to continue holding, collateralizing, borrowing, hedging, and trading without leaving Ondo.

Min Lin offered the following view of the tokenization market’s future at the end of the interview.

“There will be a point where we stop talking about ‘tokenized stocks,’ because everything will be onchain.” — Min Lin, MD of Global Business Development, Ondo Finance

In a market where every stock exists onchain, turning a stock into a token will no longer be sufficient differentiation. Tokenization will become the default format of financial markets rather than a separate product category. Competition will return to who can bring the most liquidity, capital, and trading functionality into a single account.

At that point, Ondo’s competitors will not be limited to other RWA issuers. They will include global brokerages and exchanges that provide custody, spot trading, credit, collateral, and derivatives within a single account.

The final problem Ondo must solve lies here. Bringing Wall Street’s assets onchain is not enough. The capital of the investors and market makers who hold those assets must also remain onchain.

The term “tokenization” may eventually disappear. The account where capital resides—and the market that puts it to work—will remain. That is the position Ondo is attempting to occupy.

Sources

1. Ondo Finance and Ondo Stocks

• Ondo Stocks Surpasses $1 Billion in Value as Ecosystem Surges

• Global Markets Is Live

• Ondo Stocks Overview

• Ondo Stocks: Comparison to Other Tokenized Stocks

• Ondo Stocks: Trust and Transparency

• Real 24/7 Trading for Tokenized Stocks

• Ondo Stocks: Off-Hours Trading

• Ondo Partners with Broadridge for Tokenized Stock Voting Capabilities

• Introducing Ondo Nexus

• USDY Basics

2. Ondo Perps and Infrastructure

• Introducing Ondo Perps

• Ondo Perps Official Website and Legal Disclosures

• Tokenized Stock Collateral on Ondo Perps

• Introducing the Ondo Network

3. U.S. Regulation and Institutional Infrastructure

• Ondo Finance and Oasis Pro Comment on Single-Stock Perpetual Futures

• Ondo Finance and Oasis Pro Comment on Portfolio Margin and Cross-Margining

4. Asia Expansion

• Ondo Partners with Mirae Asset

• Ondo Partners with SBI Group

5. Market Data

• RWA.xyz — Tokenized Stocks

6. Tokenized Equity Competitors

• One Year of xStocks: The Tokenized Equities Framework That Made a Market

• xStocks to Power Nasdaq’s Gateway Connecting Permissioned and Permissionless Tokenized Equities Markets

• Binance bStocks Official Announcement

• Robinhood Europe — Classic Stock Tokens

• Robinhood Europe — Perpetual Futures

• Dinari Launches 724 Tokenized Stocks for U.S. Investors and Businesses

• Securitize Brings Its Own Public Stock Onchain at Listing Day

• Superstate Opening Bell

• Coinbase Selects Centrifuge as Preferred Tokenization Infrastructure

This content is analysis material for information and research purposes and is not intended to recommend buying, selling or holding specific assets (stocks, tokens, etc.) or to replace investment judgment. All opinions and interpretations included in the text are based on public information and reasonable assumptions at the time of writing and may change depending on future market conditions or changes in policies and regulations.

This research was conducted independently without receiving any financial compensation, sponsorship, or compensation in connection with the writing of this article from the project or its affiliates. However, the author or affiliated organization may have had a paid business relationship with the project in the past, and thus a conflict of interest may exist. The opinions and interpretations contained in the text are based on the independent judgment of the author.

The final responsibility for investment decisions lies entirely with the reader, and the author assumes no legal responsibility for investment results based on this content.

© 2026 Exilist Inc. · Privacy ∙ Terms ∙ Collection notice

Exilist asked Gajia Parsons, Vice President and Global Head of Banking at Circle, questions about Circle’s identity, USDC‘s moat, the role of Circle Payments Network and Arc, and its strategy for Asia, including Japan and Korea, and received an official written response.

This article interprets the overall structure of the Internet financial infrastructure that Circle plans to build by cross-verifying the answers with Circle’s disclosures, technical documents, reserve verification reports, and official announcements from partners.

PART I. Circle Quick Brief - Update on key indicators, business structure, and institutions

1. The path that Circle has taken

• Circle was founded in 2013. In the early days, it operated services that met directly with end users, such as consumer remittance app Circle Pay and cryptocurrency exchange Poloniex.

• In September 2018, USDC was launched through the Centre Consortium along with Coinbase.

• After shutting down Circle Pay and spinning off Poloniex in 2019, the company began focusing on USDC and developer infrastructure.

• In 2023, Circle acquired Coinbase’s 50% stake in Centre and took sole responsibility for USDC governance.

• It was listed on the New York Stock Exchange (NYSE: CRCL) in June 2025.

• As of 2026, Circle is expanding its business into three axes: ① Arc and developer infrastructure, ② digital assets and liquidity infrastructure such as USDC, EURC, and USYC, and ③ applications such as CPN and StableFX.

2. USDC reserves and issuance structure

• When Circle Mint’s institutional customers deposit dollars via bank transfer, Circle issues USDC.

• Institutions can send issued USDC to an external blockchain address.

• When redeemed, send USDC to Circle to be burned and receive dollars to your registered bank account.

• Circle Mint is not available to individuals. Large-scale distributors such as exchanges, banks, institutional traders, wallets, and consumer app operators are the main customers.

• Based on the independent verification report on June 30, 2026, USDC in circulation was $73.26856 billion and the fair value of reserve assets was $73.34491 billion.

• Among these, Circle Reserve Fund assets were $61.91735 billion, or about 84% of total reserves. The remaining approximately 16% was cash stored in regulated financial institutions and payment lag adjustments.

• Circle Reserve Fund is a Rule 2a-7 Government Money Market Fund (highly liquid fund that invests in short-term government bonds and cash assets) managed by BlackRock. Fund assets are held in trust by BNY.

3. Circle’s revenue and distribution costs

• Last year, Circle’s reserve revenue in 2025 was 96% of total revenue, and other revenue was 4%.

• In the same year, distribution, transaction and other costs were approximately 61% of total revenue.

• Coinbase-related distribution costs in 2025 were approximately $1.4 billion, equivalent to approximately 53% of reserve revenue.

• Coinbase receives a distribution based on the USDC balance held on its platform and also receives half of the remaining reserve revenue generated by USDC circulating outside of Circle and Coinbase platforms. However, the issuer’s share held first by Circle and the amount paid to third-party ecosystem participants are deducted in advance, and the specific ratio of the issuer’s share has not been disclosed.

• Circle also paid Binance an advance payment of $60.3 million in 2024 and decided to pay monthly incentives based on the USDC balance held on the Binance platform and financial assets. In 2025, a separate contract linked to modular wallet infrastructure was also signed.

4. Circle’s technology/infrastructure stack

5. Update on major institutional partners for 2025-2026

March 2025 — SBI VC Trade

• Official distribution of USDC has begun under the Japanese Financial Services Agency regulatory framework. A local distribution network in Japan was secured based on the cooperation structure between Circle Japan and SBI.

April 2025 — Circle Payments Network

• CPN, which connects financial institutions and payment operators to the stablecoin payment network, was announced and began limited operation.

August 2025 — Circle Gateway

• Circle launched Gateway on the mainnet, which allows USDC distributed across multiple blockchains to be used as one integrated balance.

September 2025 — Deutsche Börse

• An MOU was signed to review ways to utilize USDC and EURC in European trading, payment, and custody infrastructure.

October 2025 — Arc public testnet

• Circle released a public testnet where financial institutions and developers can test Arc’s payment, foreign exchange, and smart contract functions.

October 2025 — BDACS·KRW1

• Won stablecoin KRW1 was distributed to Arc testnet and an MOU was signed to test KRW1-USDC on-chain transaction.

November 2025 — JPYC

• Japanese yen stablecoin JPYC participated in Circle Partner Stablecoins. Circle is pursuing JPYC-USDC foreign exchange and payment connectivity through Arc and StableFX.

December 2025 — Visa

• Cross River Bank and Lead Bank have begun settling payment obligations to Visa with Solana-based USDC. This is an example of institutional payment that has entered the actual operation stage.

February 2026 — Polymarket

• A partnership was signed to convert bridge USDC used in Polymarket to native USDC issued directly by Circle.

April 2026 — Bithumb

• An MOU was signed to jointly review measures to integrate the Bithumb platform’s multi-chain technology and support stablecoin infrastructure.

April 2026 — Dunamu·Upbit

• Circle and Dunamu agreed to cooperate to provide education on digital assets, including stablecoins, and create a regulation-friendly ecosystem.

April 2026 — CPN Managed Payments

• Circle has launched a managed payment service that processes USDC issuance and burning and blockchain settlement even if banks and payment operators do not directly hold digital assets.

April 2026 — Kyriba

• It is linked so that companies can utilize USDC within their existing treasury management system. Main applications include fund transfers between affiliates, cross-border payments, and 24-hour liquidity management.

May 2026 — Agent Stack·ARC White Paper

• Circle released the ARC white paper explaining the Agent Stack and Arc’s network economic structure, where AI agents can hold wallets and make payments with USDC.

June 2026 — Mastercard

• Announced payment support for regulated stablecoins, including USDC. It is a structure that supports multiple stablecoins and blockchains without being dependent on a specific issuer.

June 2026 — BNY

• The scope of support has been expanded to allow institutional customers to store and transfer USDC and instruct Circle to issue and redeem USDC through BNY.

July 2026 — Circle National Trust

• The U.S. Office of the Comptroller of the Currency (OCC) has finally approved the establishment of a national trust bank. It is not a commercial bank that handles general deposits and loans, but an institution that focuses on digital asset custody and reserve management.

July 2026 — JCB

• An MOU was signed to demonstrate cross-border fund transfers within JCB using USDC and to review stablecoin payments for Japanese merchants. It is not yet in the commercial service stage.

July 2026 — Kakao, Kakao Pay, Kakao Bank

• Kakao, Kakao Pay, and Kakao Bank signed a strategic MOU with Circle to review the business possibilities of global payments, overseas remittances, merchant settlement, won-based digital assets, and tokenized finance.

July 2026 — Toss · Toss Bank

• An MOU was signed to review digital wallets, biometric authentication payments, USDC-based financial instruments, programmable payments, and bank account-based overseas payments and settlements.

August 2026 — Arc Founding Validator Cohort

• Circle announced Arc’s founding validator cohort, including BlackRock, DTCC, Galaxy, Global Payments, ICE, Mastercard, MoneyGram, SBI Group, Standard Chartered, Sumitomo Corporation, and Visa, ahead of the September 16, 2026 mainnet launch.

PART II. I asked Circle, “What kind of company are you?”

1. Introduction

The easiest sentence to describe Circle is ‘USDC issuer.’ It’s not wrong.

Of Circle’s total sales and reserve revenue of $2,746.64 million in 2025, 96% came from USDC and EURC reserve assets. In the first quarter of 2026, the proportion of reserve revenue was about 94%.

Looking at its profit structure, Circle is still a stablecoin issuer.

However, if you look at the products Circle has released over the past two years, the explanation is different.

• Cross-chain USDC transfer protocol CCTP

• Integrated balance system Gateway

• Financial institution payment network CPN

• On-chain forex engine StableFX

• Proprietary Layer 1 blockchain Arc

• Circle National Trust

• And we even created an Agent Stack for AI agents.

It is difficult to view Circle’s full-stack strategy as simply an effort to expand product lines. Circle is trying to rise from an issuer that had to share reserve profits with distribution partners to a network operator that directly designs the movement path of currency and the operating standards of financial institutions.

If you are a company that only focuses on issuing stablecoins, there is no reason to go this far.

Exilist asked Circle directly. “What kind of company are you?”

“Circle has evolved into a full-stack platform for internet-native finance. Compliant stablecoins like USDC remain the foundation of Circle in terms of providing a trusted, compliant digital currency. But what we are building today goes far beyond simply issuing stablecoins.”

— Gajia Parsons, Circle Vice President and Global Head of Banking

Circle describes its current business in three layers. It is an infrastructure consisting of digital assets such as USDC, EURC, and USYC, applications such as CPN and StableFX, and Arc, CCTP, Gateway, and developer tools. The same structure appears in Circle’s 2025 Form 10-K.

The status Circle seeks is not limited to a company that creates dollar tokens. We are trying to design which chain the issued money moves to, which bank it passes through, what rules it is exchanged for, and where it makes the final payment.

However, to understand that goal, we need to look at Circle’s past trials and errors.

2. Circle Pay’s failure and new beginning

Circle was not an infrastructure company from the beginning.

Jeremy Allaire and Sean Neville founded Circle in 2013. The goal at that time was not much different from now. The goal was to make money exchange on the Internet as easy as information. However, the first answer was a consumer application, and that product was Circle Pay.

Circle Pay offered person-to-person transfers and cryptocurrency payments. In 2018, Circle expanded its exchange business by acquiring Poloniex. It was an attempt to create a comprehensive crypto financial company by combining consumer wallets, exchanges, and investment platforms within one company.

However, the results were not good.

Circle announced the end of its Circle Pay service in 2019. In the same year, Poloniex was also spun off into a separate company. In its announcement at the time, Circle acknowledged that it was difficult to move money like the Internet using only consumer apps connected to existing fiat currencies and banking networks.

Instead, another possibility was found in USDC, which was launched in 2018.

Circle Pay was able to grow only when users chose Circle’s app. USDC was different. Once exchanges, wallets, payment apps, and DeFi protocols adopted USDC, it was distributed without Circle directly securing end users. Circle was able to escape the application race and provide common assets used by other services.

The withdrawal from business in 2019 was a setback, but it was also an event that changed the business model. This later turned to creating money and infrastructure that all financial apps could use.

This transition becomes more evident in 2023. Circle acquired the remaining 50% stake in Centre Consortium held by Coinbase with shares worth approximately $209.99 million. USDC governance has been unified into Circle. At this time, Coinbase remained the strongest distribution partner, not a co-issuing partner.

Afterwards, Circle was listed on the New York Stock Exchange in 2025, and received final approval as a national trust bank from the U.S. Office of the Comptroller of the Currency (OCC) in July 2026. A company that started out as a consumer remittance app has become a company that seeks to have both a federally supervised custodian bank and its own blockchain in 13 years.

But the important part is why it had to expand this far.

3. How is 1 $USDC created and redeemed?

The structure of USDC may seem complicated, but the basic principle is simple.

Circle Mint-approved institutions transfer dollars to designated bank accounts. Once the deposit is confirmed, Circle issues the same amount of USDC to the institutional account. The institution sends it to a supported blockchain address such as Ethereum, Solana, and Base. When repaying, you send USDC to Circle to be burned and then receive dollars in your bank account. Circle Mint documentation explains this process in the following order: deposit, issue, on-chain transfer, burn, and fiat payment.

Individuals do not issue USDC directly on Circle. They buy USDC already issued on exchanges and fintech apps. Circle Mint is a wholesale outlet for large-scale distributors such as exchanges, institutional traders, banks, wallet operators, and consumer apps.

Dollars received for issuance are separated from Circle’s operating funds.

According to USDC reserves report verified by Deloitte as of June 30, 2026:

• USDC in circulation was $73.26856 billion.

• The fair value of reserve assets was $73.34491 billion.

• $61.91735 billion was in the Circle Reserve Fund.

• $11.42756 billion was cash stored in regulated financial institutions and payment lag adjustments.

The Circle Reserve Fund is managed by BlackRock. Assets consist of U.S. Treasury bonds of less than three months, overnight Treasury repo (a transaction where cash is lent for a day and U.S. Treasury bonds are collateralized), and cash. BNY stores the fund assets.

In this structure, each party’s role is clear.

• Circle manages USDC issuance, redemption, and reserve policies.

• BlackRock manages most of the reserves.

• BNY is the trustee of the fund assets.

• Banks provide dollar deposits and withdrawals and operational liquidity.

• Exchanges and fintechs distribute USDC to end users.

• Blockchain provides the ledger through which USDC moves and is settled.

USDC is not a product created by Circle alone. It is the result of a long supply chain that connects traditional finance and crypto infrastructure.

This structure creates a high level of trust, but it also means that the Circle’s scope of control is limited.

4. Economics of USDC supply chain: Blackrock, BNY, Coinbase, Binance

Interest generated from USDC reserve assets is Circle’s largest source of income. Provision revenue in 2025 was $2,636.82 million. The average USDC in circulation was $64.87 billion, and the reserve yield was 4.1%.

But not all of this money stays in Circle.

Circle’s distribution, transaction and other costs in 2025 were $1,663.65 million. It is about 61% of total revenue. Of these, the cost paid to Coinbase alone was approximately $1.4 billion.

The contract between Circle and Coinbase is deeper than a typical exchange listing contract.

According to Circle’s announcement, the daily distribution standard is first created by deducting reserve management fees, etc. Circle takes a certain share of the issuer here. Afterwards, Circle and Coinbase distribute profits according to the USDC balance stored on their respective platforms. Coinbase receives the remaining half of the remaining revenue generated by USDC distributed outside of the two companies’ platforms, minus the share of approved third-party ecosystem partners.

It was not disclosed what percentage the issuer holds. Nevertheless, economic dependence can be confirmed only by Coinbase payments in 2025. Coinbase-related expenses were approximately 53% of Circle reserve revenue.

Binance also does not distribute USDC for free.

Circle paid $60.3 million in advance to Binance in 2024 and decided to provide monthly incentives linked to the USDC balance accumulated on the Binance platform and financial assets. In 2025, a four-year contract linked to Binance’s modular smart contract wallet infrastructure was added.

This is why a stablecoin’s moat is not complete with reserve safety alone. No matter how safe the dollar token is, it will not be distributed unless exchanges, wallets, payment apps, and market makers hold and support it. The stronger the distributor, the more it has to share reserve profits.

This is why Exilist asked whether Circle sees a model that shares reserve revenues with distribution partners, like OUSD, as a threat.

“As the ecosystem develops in the future, we expect that multiple commercial models for various participants will emerge.

From Circle’s perspective, the long-term opportunity is expanding stablecoin adoption across financial services. As more financial institutions, payment providers, and businesses become comfortable with using digital currencies, the entire ecosystem will benefit.

Ultimately, financial institutions do not evaluate solutions based solely on any one commercial model. We comprehensively consider reliability, interoperability, liquidity, operational readiness, and level of integration with existing workflows.

The market is still in its infancy, and innovation through different approaches can help accelerate adoption.”

Circle did not characterize revenue sharing competition as a threat. There is a good reason. Circle itself is already actively using the model of purchasing distribution using reserve revenue.

The difference comes in the next step.

Rather than competing to promise partners a higher distribution rate, Circle is building a payment and settlement infrastructure in which USDC is the primary settlement asset, while connecting local currency stablecoins issued by third parties. The goal is to move from an issuer that shares reserve profits to a business that sets network rules.

For now, it remains closer to an aspiration than a reality. Circle’s other sales in 2025 were $109.82 million, or 4% of the total. It rose to $42 million, or about 6%, in the first quarter of 2026, but is small compared to reserve revenue.

‘Saying’ that Circle is a full-stack platform and ‘making money’ on a full-stack platform are two different issues.

5. A market where trust alone cannot become a moat

Circle put reserves centered on cash and short-term U.S. Treasury bonds, monthly external verification, weekly reserve disclosure, and 1:1 repayment at the forefront. The company also holds money transmission licenses in the U.S., New York’s BitLicense, Europe’s MiCA, Singapore’s major payment institution license, and approval for foreign-issued stablecoins in Japan. In July 2026, final OCC approval was received for the establishment of Circle National Trust.

Regulations were not a marketing pitch for Circle. This was the minimum product specification for USDC to pass the financial institution’s internal review.

“Trust is still fundamental. Financial institutions do not see trust and infrastructure as separate elements. They need both.”

The problem is that as regulations become clearer, competitors also increase.

If the United States, Europe, and Asian countries create stablecoin systems, banks, payment companies, fintechs, and large platforms can also issue regulated stablecoins. The structure of storing short-term government bonds in reserves and receiving external verification becomes standardized over time. Trust continues to be important, but the reason to choose an issuer simply because it is trustworthy is weakening.

So Circle’s line of defense is changing.

“Banks and enterprises are looking for solutions that can be used within their existing compliance, governance and operational frameworks, while also seeking infrastructure to improve the movement of funds across borders and counterparties.

Ultimately, adoption will depend on a combination of a trusted digital currency and an infrastructure that allows that currency to move efficiently between multiple banking partners, payment providers, and blockchain networks.

Fundamentally, network effects come from solving real operational problems. “Financial institutions adopt infrastructure that reduces friction while maintaining the level of control and transparency they have traditionally required.”

Circle’s moat is not just USDC. The entire path of issuing USDC, moving it between chains, making payments between banks, converting it to local currency, and connecting it to a company’s treasury management system is a moat.

6. CCTP and Gateway: Even if the chains are different, they are like one dollar

USDC exists on several blockchains. Accessibility has increased, but liquidity has fragmented.

Although Ethereum’s USDC and Solana’s USDC have the same price, they are recorded in different ledgers. Operators must pre-arrange the required quantity for each chain. If withdrawals are concentrated in a specific chain, it is difficult to respond immediately even if there is enough USDC in other chains.

Circle solves this problem by dividing it into CCTP and Gateway.

CCTP, a cross-chain transfer protocol (a system that burns USDC in the origin chain and issues the same amount in the destination chain), burns native USDC in the origin chain and issues new ones in the destination chain. Like traditional bridges, it does not deposit assets into a liquidity pool or create wrapped tokens (a replacement token that deposits the original asset and issues it on another chain).

According to the CCTP official document, fast transmission takes approximately 8 to 20 seconds, and standard transmission takes 15 to 19 minutes based on Ethereum and Layer 2. It is also possible to swap or deposit as collateral upon arrival through a programmable hook (a function that automatically executes other smart contract tasks in the destination chain after completion of transfer).

Gateway goes one step further.

Users deposit USDC into Gateway smart contracts on multiple chains. Gateway calculates this as one consolidated balance. Afterwards, when the user signs the intention to send, the off-chain verification service verifies the balance, issues a certificate, and issues USDC in the destination chain. Circle explains that this process can be done in less than 500 milliseconds.

Gateway is not a custodial service. The user’s signature is required to move assets. If the off-chain service is interrupted, trustless withdrawal (a method of recovering assets only by smart contract rules without approval from a central service) can be made after a 7-day waiting period.

The roles of the two products are different.

• CCTP moves USDC from chain A to chain B.

• Gateway initially uses USDC from multiple chains as one balance.

What Circle wants is not ‘multichain USDC’.

What Circle wants is the USDC that does not require users and companies to worry about the chain.

Once this structure is in place, USDC becomes closer to a common dollar balance that can be called across the Internet rather than a token that exists separately on each blockchain.

7. CPN: A payment network that makes blockchain invisible

Circle Payments Network (CPN) is a key pillar of Circle’s strategy.

Two financial institutions participate in the basic transaction of CPN. The originating financial institution (the institution that receives the sender’s funds and initiates the payment) performs customer verification and sanctions checks and converts the local currency into USDC or EURC. The beneficiary financial institution (an institution that receives stablecoins and pays local currency to the final recipient) converts the received assets into local currency and pays them.

Circle does not directly store customer money or become a party to transactions. It sets network participation standards and operating rules, and provides APIs and protocols so that financial institutions can communicate with each other and make direct payments. CPN participants must pass licensing, anti-money laundering, financial risk management, and cybersecurity screening.

On the surface, CPN is similar to SWIFT. But there is an important difference.

SWIFT mainly carries payment messages. Actual money moves through correspondent banks and Nostro Accounts (accounts where funds are deposited in advance at local banks for overseas payments). In CPN, stablecoins are used as actual settlement assets between institutions. Messages and money movements become closer together.

“The traditional correspondent banking system has served global finance well for a long time. However, it requires going through multiple intermediaries, has limited transparency in the payment process, and has different operating hours for each market.”

Circle did not provide an exact cost savings rate for CPN. Gajia Parsons drew the line that speed alone should not be the sole criterion.

“Onboarding, compliance, engagement and governance must also be seamlessly integrated with existing treasury management and bank operations. Technology only has real value when it aligns with the way financial institutions already manage risk and controls.”

This answer clearly shows Circle’s view of on-chain finance.

Circle is not trying to eliminate the banks. Confirmation of the sender, local currency conversion, final payment, and dispute response are still handled by the financial institution. Circle changes the settlement assets and communication rules in between.

CPN Managed Payments, launched in April 2026, pushed this direction further. Banks and PSPs do not store digital assets directly and can only handle fiat currency. Circle manages USDC issuance and burning, payment coordination, compliance control, and blockchain infrastructure.

The sender can pay in won and the recipient can receive dollars. Neither of them need to know that USDC was used in the middle.

This is paradoxical, but important.

The popularization of stablecoins is more likely to be completed at the moment when people do not even know that they have used stablecoins, rather than at the moment when they directly use them.

CPN is still in its early stages, but transaction volume is growing rapidly. Annualized transaction volume based on trailing 30-day activity increased from $8.3 billion as of March 31, 2026 to $14.7 billion as of June 30, representing 76% quarter-over-quarter growth.

While the absolute scale remains relatively small, the growth rate provides a clearer indication of CPN’s early adoption trajectory. Whether this momentum can be sustained will depend on actual transaction volume, institutional adoption, and repeat usage over time.

8. Arc and StableFX: Why Circle created its own execution environment

Circle has long emphasized a multi-chain strategy. USDC has been issued across multiple public blockchains, while products such as CCTP and Gateway are designed to connect liquidity and value across those networks.

Against this backdrop, Circle created Arc, its own Layer-1 infrastructure, which is currently operating as a private mainnet and is scheduled for a public mainnet launch on September 16, 2026. More than 100 ecosystem and institutional builders are already working on the private mainnet.

On the surface, this can seem contradictory. Why create another blockchain when Circle’s broader strategy has focused on connecting multiple chains?

Circle’s official response focused on the conditions financial institutions want, rather than directly explaining Arc itself.

“Financial institutions don’t want to have to manage distributed infrastructure across multiple environments. What they want is interoperability, consistency, and operational simplicity. Success won’t come from adding more blockchains. It will come from making it possible for banks, enterprises, and end users to experience seamless movement of value between networks.”

Arc is a general-purpose smart contract platform, but its architecture is clearly geared toward finance.

• USDC is used as the native gas token.

• Transaction costs are denominated in USDC, making them predictable in dollar terms.

• Testnet block time is approximately 0.48 seconds, with deterministic finality in under one second.

• It is compatible with the Ethereum Virtual Machine (EVM, the standard environment for executing Ethereum smart contracts).

• Optional privacy is provided through the Arc Privacy Sector.

• It is designed to integrate with Circle products and infrastructure such as CCTP, Gateway, and Circle Wallets.

According to the current Arc documentation, consensus uses Malachite BFT and validator participation is permissioned. Building and deploying applications on Arc is permissionless, while validation is performed by a limited set of known, established institutions. This structure is intended to provide greater accountability and operational assurances for regulated financial settlement.

This institutional model is already taking concrete form. In August 2026, Circle announced Arc’s founding validator cohort, which includes BlackRock, DTCC, Galaxy, Global Payments, ICE, Mastercard, MoneyGram, SBI Group, Standard Chartered, Sumitomo Corporation, and Visa, alongside Circle. Rather than relying on anonymous validators, Arc is being secured by institutions that are themselves active participants in global payments, capital markets, custody, and financial infrastructure.

The significance goes beyond validation. Major institutions are also exploring direct integrations with Arc. BlackRock is expected to deploy BUIDL, its tokenized institutional liquidity fund, on the network. Circle is also working with DTCC to enable DTC-custodied assets to be tokenized on Arc beginning in the second half of 2027. BNY and Standard Chartered are exploring integrations spanning digital asset custody, stablecoin access, tokenized settlement, FX, and repo infrastructure.

At the same time, Arc is not designed as a closed institutional network. Circle describes it as combining permissionless application development with institutional-grade infrastructure. DeFi protocols, exchanges, wallets, payment providers, and infrastructure companies including Aave, Uniswap, Kraken, Fireblocks, MetaMask, Upbit, Rain, and Thunes are among the projects expected to support the network.

Arc also has a published roadmap that includes a transition from its current permissioned Proof-of-Authority model to permissioned Proof of Stake. A potential ARC token is designed to support this transition through staking and delegation.

In May 2026, $222 million was raised through an ARC token presale, with the network valued at a $3 billion fully diluted valuation. Participants included a16z crypto, Apollo, BlackRock, ICE, SBI Group, SC Ventures, and others.

However, the ARC whitepaper states that the token has not yet launched and that no final decision has been made regarding its development, deployment, or functionality. This means that, despite the presale, the token’s launch and design remain subject to change.

On Arc, USDC is used to pay gas fees, while a potential ARC token is designed to coordinate network security, economic governance, fee mechanics, and broader network participation. In this sense, the proposed architecture separates the transactional asset from the network coordination asset.

StableFX is the application that best demonstrates why Circle needs Arc.

At StableFX, certified institutions request foreign exchange quotes from multiple liquidity providers. Once the most advantageous price is selected, both currencies are committed to a smart contract, and settlement is completed only when both sides of the transaction are ready. This implements Payment-versus-Payment (PvP, a structure in which payment in one currency and receipt of another occur simultaneously) on-chain, reducing foreign exchange settlement risk.

Circle also recognizes that this market cannot be built with USDC and EURC alone. The Circle Partner Stablecoins program includes Japan’s JPYC, Korea’s KRW1 issued by BDACS, Brazil’s BRLA, Mexico’s MXNB, and the Philippines’ PHPC.

Circle does not need to issue every currency itself. Instead, it can bring local issuers into Arc, StableFX, and CPN, creating a network in which different currencies and stablecoins can trade and settle against USDC.

This structure also helps explain why Circle does not necessarily view other regulated stablecoin models as unconditional competitors. If third-party stablecoins are traded and settled within Circle’s infrastructure, they can simultaneously compete with Circle-issued assets while also contributing to the value of the broader network.

9. USDC entering bank, card company, and corporate systems

Circle has many partnerships. But just collecting logos is meaningless. This is because actual operation, planned release, and review stages are mixed.

First, the relationship with BNY is the most direct.

BNY is the asset custodian of the Circle Reserve Fund and the main custodian of USDC reserves. In June 2026, the role was expanded to allow BNY institutional customers to store and transfer USDC on the digital asset custody platform and instruct Circle to issue and redeem USDC through BNY. BNY’s official announcement emphasized that it has incorporated traditional asset custody and the entire life cycle of USDC into one institutional operating system.

Circle National Trust is a vertical extension in the other direction.

Circle National Trust, which received final approval from the OCC in July 2026, will hold in custody the digital assets of Circle and its affiliates in the early stages of business opening. It is not a commercial bank that accepts deposits and makes loans, but is a national trust bank that focuses on trust and reserve management. Depending on future demand, it can provide services to a limited number of institutional customers and even take charge of USDC reserve management. It has not yet replaced BNY and BlackRock. However, Circle secured the option to directly operate not only issuance but also part of custody and reserve management under federal supervision.

Visa moved first in the card payment network.

Visa announced that in December 2025, Cross River Bank and Lead Bank in the United States will begin settling Visa payment obligations in USDC on Solana. The consumer’s card usage experience does not change. The only difference is the settlement asset that the card issuer and acquirer pay to Visa behind the scenes. Visa is an Arc design partner and also plans to operate validators and utilize USDC payments after the mainnet launch.

Mastercard announced support for regulated stablecoin payments, including USDC, in June 2026. However, Mastercard does not only support USDC. PYUSD, USDG, USDP, RLUSD, SoFiUSD and multiple blockchains are supported.

This difference is important. Visa’s participation in Arc is a strong endorsement of Circle infrastructure. On the other hand, Mastercard’s multi-asset strategy shows that the global payment network does not seek to be dependent on any specific issuer.

Kyriba is the link in corporate finance management.

Kyriba and Circle announced a collaboration to introduce USDC into corporate treasury management systems in April 2026. Companies can use USDC to move funds between affiliates, manage liquidity around the clock, and make cross-border payments while maintaining existing approval rules and audit records. Kyriba said its system processes $51 trillion in payments and 10,000 bank connections annually.

In the capital market, progress must be distinguished.

• Polymarket decided to switch from bridge USDC to native USDC issued directly by Circle.

• ICE signed an MOU to review ways to utilize USDC and USYC in derivatives exchanges, clearinghouses, and data services.

• Deutsche Börse also signed an MOU to utilize USDC and EURC for trading, payment, and custody infrastructure.

The completion date of the Polymarket conversion still needs to be confirmed, and ICE and Deutsche Börse are in the review stage. Nonetheless, the direction of the partnership is consistent. Circle plans to use USDC as an institutional collateral, payment, and fund management asset rather than as a retail payment method.

“What’s important is not how Circle defines itself internally. It’s more about whether financial institutions can adopt this technology within their existing treasury, compliance and operational frameworks.”

The on-chain finance that Circle talks about is not a model that attacks existing finance from the outside. This is a model that goes into existing systems such as BNY, Visa, Mastercard, and Kyriba and changes the payment assets in the backend.

10. Asian strategy starting from Japan and Korea’s conditions

The most specific example of Circle in Asia is Japan.

SBI VC Trade began distributing USDC under the Japanese Financial Services Agency system in March 2025. Circle explains that USDC is the first global dollar stablecoin allowed for circulation in Japan through local regulations. Binance Japan, bitbank, and bitFlyer also announced their future handling plans.

If you only look at entering Japan as a way to secure liquidity on the exchange, you are only seeing half the picture.

The scope of cooperation between Circle and SBI includes USDC distribution, bank connectivity, and Web3 infrastructure. Circle has a local corporation, Circle Japan, and the yen stablecoin JPYC also participates in StableFX. The plan is not just to upload dollar stablecoins to the Japanese exchange, but also to create payment and foreign exchange channels between yen and dollars.

In July 2026, Japan’s international card brand JCB also signed an MOU with Circle. The two companies will review JCB’s internal cross-border fund transfers using USDC and the stablecoin payment experience of Japanese merchants. While SBI opened a regulated USDC distribution window, JPYC takes charge of the yen foreign exchange connection, and JCB takes charge of the merchant payment contact point. However, JCB cooperation is in the verification and review stage.

Exilist asked where meaningful demand would come from in Japan first.

“The most consistent need we hear from banks and enterprises is to move funds across borders. Corporate treasury managers are looking at areas where traditional payments infrastructure still presents delays, costs and operational complexities, including supplier payments, cross-affiliate liquidity management and marketplace payouts.”

Circle prioritized corporate payments over exchange transactions.

This judgment does not apply only to Japan. In Asia, currencies and regulations are segmented by country, and cross-border B2B payments involve multiple banks and currency exchange procedures. On the other hand, there is great demand for manufacturing supply chains, e-commerce, overseas wages, and movement of funds between affiliates. It fits the problem Circle is trying to solve.

In Korea, Circle’s partner map has expanded rapidly in 2026.

In April, Circle signed a digital asset infrastructure MOU with Bithumb. The two companies will jointly review Bithumb platform’s multi-chain functionality and stablecoin infrastructure support measures. On the same day, an MOU was signed with Upbit operator Dunamu, but Dunamu cooperation is focused on digital asset education and creating a regulation-friendly ecosystem. This is not an announcement that Circle infrastructure has been integrated into Upbit.

In July, the scope was expanded beyond the exchange. The MOU with Kakao, Kakao Pay, and Kakao Bank considered global payments, overseas remittances, merchant settlement, won-based digital assets, and tokenized finance as subjects of review. The MOU with Toss and Toss Bank covers digital wallets, biometric authentication payments, USDC-based financial instruments, on-chain programmable payments, and bank account-based overseas payments and settlements.

Circle’s Korean partners are divided into three levels.

• Exchange infrastructure and ecosystem: Bithumb’s review of multi-chain and stablecoin, Dunamu and Upbit’s education and ecosystem cooperation

• Consumer payments and bank settlement: Kakao Pay, Kakao Bank, Toss, Toss Bank

• Korean Won Stablecoin and Forex: KRW1 on BDACS

Circle’s Korean partner map spans exchange, consumer payments, banking and won FX - in each case supplying connective infrastructure to a local partner that owns the customer relationship and, where relevant, issues the local currency token. However, all that is currently confirmed is the MOU and technology/business review. The launch date for USDC-based payment or settlement services has not been announced.

Circle also provided conditional answers to Exilist’s Korea-related questions.

“We have seen institutional adoption move quickly in markets with clear regulations, active bank participation, and clear operating standards. As the market matures, collaboration between regulators, financial institutions, and technology providers will be a critical factor in enabling responsible adoption.”

Circle’s institutional strategy will not be completed simply by increasing USDC trading support in Korea. There are three things you need:

1. Regulated KRW deposit/withdrawal and USDC issuance/redemption channels

2. B2B payment and settlement network in which banks and PSPs participate

3. Institutional foreign exchange market between KRW stablecoins and USDC

BDACS signed an MOU with Circle in October 2025 to distribute KRW1 to Arc and test KRW1–USDC on-chain trading. The inclusion of KRW1 in Circle Partner Stablecoins is the initial connection point for the third structure. However, it should be clear that StableFX, Arc, and KRW1-USDC trading are still in the testing and implementation stage.

The difference between Korea and Japan is revealed here. In Japan, USDC distribution has already begun through SBI VC Trade, and JPYC and JCB verification are being added on top of that. In Korea, the range of partners is wider, including exchanges, big tech, and internet banks, but it is still more about preparing for the overhaul of the system rather than actual services.

11. Internet finance stack expanded to AI agents

Circle’s latest narrative doesn’t stop at institutional payments.

In May 2026, Circle announced Agent Stack. It is a set of tools created to allow AI agents to hold assets, find necessary services, and make payments with USDC within set limits.

The composition is as follows.

• Agent Wallets: Agent wallet that allows you to set policies such as hourly spending limits and allowed/blocked addresses.

• Agent Marketplace: A directory where agents find APIs and services to use.

• Circle CLI: An interface where the agent executes wallet creation, policy settings, and payment using commands.

• Nanopayments: Ultra-small payments without gas fees that process amounts as small as $0.000001 using Gateway

• Circle Skills: Development patterns used by AI development tools to implement Circle products

Circle’s argument is that USDC accounts for a high proportion of payments in the x402 ecosystem. The agent economy is still small. Unlike corporate payments, actual recurring demand has not been verified.

Still, Circle’s logic is consistent.

Whether a person is sending money through a banking app, a corporate treasury management system is transferring liquidity to an affiliate, or an AI agent is paying API usage fees, the need is the same. It is a payment asset that can be used at all times, is programmable, and can be moved to multiple networks.

Circle seeks to expand USDC from a digital dollar for people to a payment unit used by software.

This attempt is also connected to Arc. Arc specifies agent transactions as a use case and offers USDC gas fees and sub-second payment confirmation. Gateway integrates balances from multiple chains, and Agent Wallets applies spending policies.

AI is not a separate business that Circle suddenly added. This is a new group of customers who will use the wallet, cross-chain transfer, micropayment, and policy control features that Circle has built up over the years.

However, narrative and business should not be confused. It has not yet been revealed how much Agent Stack contributes to Circle’s revenue diversification. Now it’s more of a strategic option.

Conclusion: Circle’s final product may not be USDC

Circle was successful as a USDC issuer. However, publishing alone does not allow you to go to the next step.

USDC reserves are managed by BlackRock and held in custody by BNY. In distribution, Coinbase and Binance have great influence. Execution relies on external blockchains such as Ethereum and Solana. The final currency exchange and payment are handled by banks and PSPs in each country.

Circle cannot get rid of these partners. Rather, it needs them more.

Instead, Circle tries to create rules for connecting partners.

• It manages issuance and redemption through Circle Mint.

• CCTP and Gateway standardize USDC movement between chains.

• CPN creates international payment rules for banks and PSPs.

• StableFX connects foreign exchange between local currencies.

• Arc provides a common environment where payments, foreign exchange, and collateral are carried out.

• Circle National Trust expands the scope of control of trusteeship and reserve management.

• The Agent Stack attracts AI agents/software as economic participants.

Therefore, it is difficult to call Circle’s strategy solely vertical integration. Rather than trying to directly own the entire supply chain, Circle is building a control plane (an upper layer that manages the rules and policies for linking multiple systems) to coordinate the supply chain.

However, four tensions remain.

First, current sales are still dependent on interest rates and USDC circulation. For a platform strategy to be successful, meaningful non-interest revenue must be generated from CPN, Arc, and developer services.

Second, Circle speaks of openness, but USDC is at the center of the network. CPN advocates stablecoin neutrality, and StableFX accepts local stablecoins. It has not yet been decided whether financial institutions will view this as a neutral infrastructure or a USDC distribution network.

Third, although Arc is a public blockchain, current validators are permissioned. It remains to be seen how the ARC token and proof-of-stake transition will adjust openness and institutional control in the future.

Fourth, announced partnerships must be converted into actual transaction volume. MOU, testnet, and design partners do not guarantee sales or recurring payments.

Nevertheless, the direction of Circle is clear.

“The industry will move from individual stablecoins to a complete financial infrastructure stack that will allow money to move as quickly and programmably as the Internet.”

What Circle really wants is for banks to use existing screens, for businesses to use existing money management systems, and for consumers to swipe existing cards. The structure in which USDC is settled behind the scenes, CPN connects institutions, and Arc confirms transactions is closer to the future that Circle wants.

When that future comes, users may not even know they used USDC.

The standards for judging the success of a circle must also change. It is not enough to just look at how much the USDC market capitalization has grown. It remains to be seen whether financial institutions treat Circle as one of several stablecoin issuers or whether they accept it as the basic infrastructure for accessing internet finance.

Circle’s final product may not be USDC.

A system that keeps USDC moving behind the scenes. What Circle is trying to create is close to that system.

Source

Quotes attributed to Gajia Parsons are based on official written responses provided by Circle to Exilist. The responses have been lightly edited for formatting and clarity where necessary, without altering their intended meaning.

1. Circle regulation/disclosure

• Circle 2025 Form 10-K

• Circle 2026 first quarter performance

• June 2026 USDC reserve verification report

• Circle reserve transparency

• Circle National Trust OCC final approval

2. Technology and products

• Circle Mint

• CCTP technical documentation

• Circle Gateway

• Circle Payments Network

• CPN Managed Payments

• Arc technical documentation

• ARC White Paper Guide

• Circle StableFX and Partner Stablecoins

• Circle Agent Stack

3. Partner official announcement

• BNY’s USDC custody, issuance, and redemption support

• US USDC payments by Visa

• Mastercard supports stablecoin payments

• Kyriba corporate fund management linkage

• Circle·SBI Japan USDC distribution

• BDACS·Circle’s KRW1 Arc distribution MOU

• Participation in JPYC’s Circle Partner Stablecoins

• Multichain/stablecoin infrastructure MOU between Bithumb and Circle

• Dunamu and Circle’s digital asset innovation and education MOU

• JCB·Circle’s cross-border fund transfer and merchant payment MOU

• Digital asset infrastructure MOU between Kakao, Kakao Pay, Kakao Bank, and Circle

• Toss, Toss Bank, and Circle’s stablecoin payment MOU

• Circle·Polymarket partnership

• Circle·ICE MOU

• Circle·Deutsche Börse MOU

This content is analysis material for information and research purposes and is not intended to recommend buying, selling or holding specific assets (stocks, tokens, etc.) or to replace investment judgment. All opinions and interpretations included in the text are based on public information and reasonable assumptions at the time of writing and may change depending on future market conditions or changes in policies and regulations.

This research was conducted independently without receiving any financial compensation, sponsorship, or compensation in connection with the writing of this article from the project or its affiliates. However, the author or affiliated organization may have had a paid business relationship with the project in the past, and thus a conflict of interest may exist. The opinions and interpretations contained in the text are based on the independent judgment of the author.

The final responsibility for investment decisions lies entirely with the reader, and the author assumes no legal responsibility for investment results based on this content.

© 2026 Exilist Inc. · Privacy ∙ Terms ∙ Collection notice

Introduction

On June 9, Anthropic introduced Claude Fable 5 and Claude Mythos 5. Fable 5 was a high-performance Claude model designed for general users, while Mythos 5 was a more restricted model made available to security teams and major infrastructure operators. Both models were presented as especially strong in software engineering and security vulnerability detection.

A few days later, the U.S. government ordered Anthropic to suspend access to both models for foreign nationals. The restriction did not apply only to users outside the United States. It also applied to foreign nationals inside the U.S. and to Anthropic employees who were foreign nationals. Because it was difficult to separate access conditions in a more granular way, Anthropic eventually suspended access to Fable 5 and Mythos 5 for all customers.

The first thing to note is the changing status of AI. Frontier AI models are no longer being treated like ordinary software. The fact that the U.S. government treated model access as an export control issue suggests that AI is now tied to cybersecurity, infrastructure defense, and potential offensive capabilities.

At the same time, the weakness of centralized AI became clear. When a model runs on a company’s servers and access depends on government orders and corporate policy, users can be cut off at any time. Most users will continue to use convenient centralized AI services. But users who care about privacy and self-sovereignty will start looking for other options.

A similar structure has already appeared in crypto. Bitcoin became an alternative outside the centralized financial system, and Zcash absorbed demand for privacy. The AI market could develop in a similar way. Even if centralized AI captures most of the market, decentralized AI, or DeAI, and privacy-focused protocols may still secure meaningful demand.

The restriction on Fable 5 and Mythos 5 is more than just an AI regulation story. It is closer to an example of how stronger AI leads to stronger control, and how that control can increase demand for decentralized or privacy-focused infrastructure.

1. Why Fable 5 and Mythos 5 Became Sensitive

Fable 5 and Mythos 5 became sensitive because of what the models could do.

A typical AI chatbot writes text, explains code, and summarizes documents. Fable 5 and Mythos 5 moved into a more sensitive area. Anthropic described Fable 5 as stronger than its previous generally available Claude models in software engineering, scientific research, and long-running tasks. The model was designed to handle longer work with fewer instructions and break down complex problems into multiple steps.

Mythos 5 was more restricted. It was offered to security teams and major infrastructure operators. Rather than a general AI assistant for everyday users, it was closer to a security audit tool that could inspect code and systems for hidden vulnerabilities.

This capability is useful for defenders. It can read old codebases and find vulnerabilities that humans may have missed. Security teams can identify weaknesses and patch them faster. But the same capability becomes dangerous if attackers gain access to it. The ability to find vulnerabilities can be used for both defense and offense.

This was also the area that drew attention from the U.S. government. Anthropic said the government was concerned about a possible jailbreak method that could bypass Fable 5’s safeguards. Anthropic argued that the method only surfaced a narrow set of minor vulnerabilities and that similar capabilities were already available in other public models.

Later reporting suggested that the issue was not limited to jailbreaking. Semafor reported that the U.S. government was concerned about the possibility that a China-linked actor may have gained access to Mythos. Wired reported that the White House had raised concerns over SK Telecom’s access to Mythos and possible China links, while SK Telecom denied those concerns. The details of these allegations have not been confirmed. Still, it is clear that the U.S. government has started to treat not only the performance of advanced AI models, but also who can access them and through which channels, as a national security issue.

This also connects to concerns around model distillation. Distillation is a method of training a smaller model using the outputs and behavior of a stronger model. Even without stealing the model file itself, enough access to a powerful model can create concern that some of its capabilities could be replicated. From a government’s perspective, simply giving someone access to a model can become a risk.

2. The Stronger Centralized AI Becomes, the More It Gets Controlled

Until now, AI competition has mostly been explained through performance. Which model can handle longer context? Which one writes better code? Which one is better? These have been the main questions.

The Fable 5 and Mythos 5 incident introduces a critical new vector for evaluation: access continuity. No matter how strong a model is, it cannot be used if access is blocked. The value of a model now needs to be judged not only by performance, but also by access.

Crypto markets are familiar with this structure. Bitcoin emerged as a network for transferring value without a central bank. The issue was not only price. The more important questions were who controls issuance, who can censor transactions, and who can block access to accounts.

Privacy coins emerged from a similar need. In a blockchain environment where transactions are visible, some users wanted stronger privacy. Zcash was designed for that demand. It is not a mainstream asset in the same way Bitcoin is, but it has a clear reason to exist for users who need privacy.

The AI market could split in a similar way.

Most users will use centralized AI services from companies like OpenAI, Anthropic, and Google. These services are convenient, powerful, and backed by support and reliability, which matters especially for enterprise customers. But not every user values the same things. Some users may prioritize access continuity, data privacy, and censorship resistance over raw performance.

As centralized AI becomes more powerful, government and corporate control will also increase. In this environment, DeAI and privacy protocols do not need to fully replace centralized AI. They can instead become complementary infrastructure that reduces control risk.

The opportunity for DeAI does not only come from building a chatbot that is better than OpenAI. In a world where access to centralized models can be shut off, the more important question is whether DeAI can provide a path that remains open.

3. Why Bittensor Reacted

The market reacted quickly after Anthropic’s announcement. One clear example was Bittensor’s TAO. Grayscale interpreted the event as a sign of centralized AI control risk and argued that it highlighted the need for decentralized AI networks like Bittensor. According to Grayscale, TAO rose about 30% within 12 hours after Anthropic’s announcement.

This price move was not just a reaction to one company. The market was responding to the possibility that access to centralized AI could become a policy-driven variable.

Bittensor describes itself as something close to Bitcoin for AI. If Bitcoin created a network for digital value without a central bank, Bittensor is trying to build a network that connects models and inference resources without relying on a central AI company. Participants can contribute to the network and receive rewards.

This does not mean Bittensor is about to build a general-purpose model that is better than Anthropic or OpenAI. Looking at it that way misses the point. The reason to pay attention to Bittensor is less about whether it can build a better chatbot than Claude, and more about whether it can provide another route when access to centralized AI is restricted.

Different DeAI projects focus on different parts of the stack. Bittensor is closer to a model and incentive network. Render and Akash are trying to decentralize the GPU and compute resources needed to run AI models. Gensyn is focused on moving AI training and verification outside centralized cloud infrastructure. Ritual aims to provide infrastructure that allows blockchain applications to use AI models. Nous Research is closer to an open-source AI research group than a crypto project, but it can still be discussed within the broader sovereign AI movement that seeks to reduce dependence on centralized models.

These projects should not all be evaluated in the same way. They differ in development stage, real usage, and token structure. The common question is simple: when centralized AI becomes unavailable, what alternative path can the project provide?

4. Why Privacy Demand Is Becoming Important Again

The DeAI price reaction alone does not fully explain this incident. The access restrictions on Fable 5 and Mythos 5 showed the possibility of centralized AI being controlled, and also revealed why data privacy is becoming more important in the AI era.

AI requires more personal context than a search engine. Users enter work documents, code, customer information, investment ideas, security vulnerabilities, and personal messages into AI systems. As AI becomes more powerful, users entrust it with more sensitive data. At that point, the important question is not simply “which model is smarter.” It also becomes important to ask who stores and controls users’ prompts, data, and access records.

This trend is also visible in the AI strategies of major companies. Apple emphasized Private Cloud Compute when it announced Apple Intelligence. That is because, for users to use AI on a daily basis, they need trust in where their personal data goes and who can see it. Cisco’s consumer privacy survey also found that more than 75% of consumers would not buy from an organization they do not trust with their data.

This is where the Zcash case becomes relevant. Zcash is a privacy-focused crypto project launched in 2016. It was designed to prove that a transaction is valid while hiding who sent it, who received it, and how much was sent. If Bitcoin represents censorship resistance and store-of-value demand, Zcash addresses privacy demand more directly.

Zcash is not a DeAI project. But in the context of this article, it shares an important question. As centralized systems become stronger and more controllable, what data do users leave behind, who can see those records, and what alternatives can users choose?

Therefore, privacy in the age of AI control is not simply a matter of anonymity. It is an infrastructure issue that protects user choice and access. Zcash can be seen as an example showing that privacy demand has existed independently outside centralized systems. As centralized AI becomes more powerful, protocols that provide data privacy and censorship resistance may also receive renewed attention.

5. Anthropic’s Dilemma

Anthropic has not been a company that opposed AI regulation. If anything, it has been one of the companies calling for stronger AI safety rules. CEO Dario Amodei has warned that AI could soon resemble “a country of geniuses in a data center” within the next one to two years. He has argued that advanced AI models need independent safety testing before release.

This time, Anthropic itself became the direct target of government restrictions.

There is a growing argument that powerful AI must be controlled because it can be dangerous. At the same time, the same models are also useful for defenders. They are used in cybersecurity, infrastructure defense, and protocol audits.

Blocking a powerful model does not only block attackers. It also removes the same tool from defenders. The Zcash audit is an example of this. Mythos was treated as a risky model that the government wanted to restrict, but it was also used to help review the security of a crypto protocol.

AI companies will argue for safer deployment. Governments will restrict access in the name of national security. Users will need to ask whether the model they used yesterday will still be available tomorrow. If this conflict repeats, markets will start placing a premium not only on performance, but also on access.

6. Three Criteria to Watch Going Forward

After this incident, AI projects need to be evaluated with more specific standards. Not every project with “AI” in its name solves the same problem. Not every project that calls itself decentralized reduces the same risk.

The first criterion is access continuity.

Can the project keep working even if a company or government blocks access? Until now, AI services have mostly worked by relying on companies that build strong models and open APIs. Users did not pay much attention to where the model runs or under what conditions access could be restricted. After the Fable 5 and Mythos 5 incident, that assumption has weakened. Model performance is the starting point, but access continuity is becoming a new evaluation standard.

The second criterion is privacy.

The more people use AI, the more data flows into models and platforms. Company code, customer information, internal documents, security vulnerabilities, and research materials can all become part of AI usage. Centralized AI is convenient, but it creates dependence on where data is stored and who can access it.

Privacy protocols, local and open-source models, and decentralized compute can create demand in this area. Not every user will choose these alternatives. But there will be a meaningful group of users who care about censorship resistance and data sovereignty. Bitcoin and Zcash have already shown this pattern. Mass-market demand and core-user demand can move differently.

The third criterion is usage evidence.

If a DeAI project is actually being used, there should be traces of that usage. Who is calling the model? What tasks is it being used for? How much computation is happening? Does the output lead to real user activity? Token prices can move first, but long-term value needs usage behind it.

The rise of access risk does not mean every DeAI project deserves the same valuation. Over time, the market will separate projects with real usage from projects that only have a narrative.

Conclusion

The AI market can no longer be explained only by asking who has the smartest model. We also need to ask who can access the model, under what conditions that access can be restricted, and where user data is stored.

The AI market is also starting to see price competition. Companies like OpenAI and Anthropic are under pressure to reduce token prices and usage costs to win enterprise customers. Cost has become a bigger issue because AI is being used more often. If AI were only a toy that people used occasionally, companies would not be worried about token costs.

Centralized AI is likely to remain dominant. More capital, data, GPUs, and enterprise customers will flow toward centralized AI companies. Most of the mass market will likely remain there.

But mass-market users and core users can move differently. As powerful AI becomes a national security asset, control becomes stronger. As control becomes stronger, users who care about access, privacy, and censorship resistance will look for separate alternatives.

Bitcoin did not replace the entire centralized financial system. Zcash did not replace Bitcoin. But both captured clear, specific demand. DeAI and privacy protocols can occupy a similar position. They do not need to fully replace centralized AI. They can instead become a market for access continuity, data sovereignty, and censorship resistance that centralized AI does not provide.

The Fable 5 and Mythos 5 incident accelerated this direction. AI has become stronger, and governments have started to control access. The next question is what kind of infrastructure can remain outside that control.

As centralized AI becomes more powerful, demand for infrastructure outside of it may grow as well.

Disclaimer

This material is provided for informational and research purposes only and does not constitute investment advice, nor is it intended to recommend the purchase, sale, or holding of any asset (including equities or tokens), or to replace independent investment judgment.

All views and analyses expressed herein are based on publicly available information and reasonable assumptions as of the time of writing, and are subject to change depending on market conditions, policy developments, or regulatory changes.

This research has been prepared independently and without any financial compensation, sponsorship, or incentives from any of the projects or their affiliated parties mentioned. However, the author or affiliated organization may have had prior commercial relationships with such projects, and potential conflicts of interest may exist. All opinions and interpretations presented in this material reflect the independent judgment of the author.

The final responsibility for any investment decisions rests solely with the reader. The author assumes no legal liability for any outcomes resulting from reliance on this content.

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Introduction

As of May 2026, the center of gravity in Korean markets is no longer crypto. It is equities.

The KOSPI is approaching 8,000 for the first time in history, while Samsung Electronics and SK Hynix are leading one of the strongest AI semiconductor rallies Korea has seen in years. What initially looked like a simple thematic trade has evolved into something larger: a retail-accessible narrative around industrial growth that Korean investors can directly understand and emotionally participate in.

Generative AI adoption, accelerating data center investment, and rising HBM demand have all translated into stronger earnings expectations for Korean semiconductor leaders. As a result, Korean retail liquidity has aggressively rotated back into equities.

At first glance, this appears bearish for crypto.

Domestic crypto exchange balances and trading activity have fallen significantly from previous cycle highs. Bitcoin has reclaimed $80,000, yet the retail-driven altcoin mania Korean traders continue waiting for has still not arrived.

However, this report argues that many investors may be interpreting the current setup incorrectly.

Liquidity has not disappeared from crypto markets.

It is simply parked elsewhere for now.

Korean retail investors are not avoiding risk assets. On the contrary, they are rediscovering risk appetite through AI semiconductor equities, KOSPI momentum, and thematic growth stocks. The key difference is that the destination of capital is currently equities rather than crypto.

The central question of this report is therefore straightforward:

Can capital that flowed into KOSPI large caps, KOSDAQ themes, and AI semiconductor momentum eventually rotate back into KRW-denominated altcoin markets?

Meanwhile, the first stage of crypto recovery is already underway.

Bitcoin has reclaimed $80,000, global crypto market capitalization remains above $2.7 trillion, and ETF inflows have resumed. Institutional participation continues expanding through regulated infrastructure.

Still, this recovery remains heavily Bitcoin-centric. Altseason indicators remain below historical thresholds, while domestic altcoin trading activity remains far below previous speculative peaks.

Nevertheless, multiple structural conditions are beginning to align simultaneously.

• Institutional and ETF capital has already re-entered crypto through Bitcoin.

• Stablecoin supply and KRW exchange deposits suggest sidelined liquidity still exists both inside and outside crypto markets.

• U.S. regulation is increasingly moving toward formal integration of stablecoins and digital asset market structure into traditional finance.

• Most importantly, KOSPI 8,000 itself signals the return of Korean retail risk appetite.

In the short term, this absorbs liquidity away from crypto. But in the medium term, it may become the starting point for rotation into higher-beta assets.

This matters because Korea occupies a uniquely important position within altcoin spot markets.

Compared to most global markets, Korea structurally favors altcoins over Bitcoin and operates through highly concentrated KRW-based spot trading infrastructure. Korean retail investors generate exceptionally high turnover in altcoin trading, particularly through Upbit and Bithumb.

As a result, if Korean retail risk appetite rotates from equities back into KRW altcoin markets, price elasticity across altcoins could expand dramatically.

The base-case scenario outlined in this report is relatively simple:

BTC leadership → AI semiconductor rally → profit-taking and corrections in large-cap equities → search for higher-beta recovery trades → recovery in large-cap altcoins → expansion of AI/RWA/tokenized equity narratives → re-ignition of KRW altcoin markets → speculative rotation into smaller and lower-liquidity altcoins

The conditions for a full altseason are not yet complete.

But the liquidity, psychology, regulation, and narrative conditions required for one are accumulating rapidly.

The current KOSPI rally is not necessarily the opposite of an altseason.

It may actually be the earliest signal that Korean retail risk appetite is returning.

1. Bitcoin Reclaimed $80,000. But This Is Still Not an Altseason.

In early May 2026, Bitcoin reclaimed the $80,000 level once again.

According to CoinMarketCap data as of May 12, Bitcoin traded around $81,000 while global crypto market capitalization remained near $2.7 trillion. BTC dominance remained near 60%, confirming that the market is still decisively Bitcoin-centric.

CoinMarketCap’s Altcoin Season Index compares the 90-day performance of the top 100 cryptocurrencies against Bitcoin. Historically, readings above 75 are considered indicative of an altseason. As of early May, the index remained near 50.

BlockchainCenter’s altseason index applies a similar framework, requiring 75% of the top 50 assets to outperform Bitcoin over a 90-day period. Recent readings remained near 35.

By historical standards, this is still far from a broad altcoin outperformance cycle.

However, interpreting these indicators purely as bearish signals would be misleading.

Altseason indicators are inherently lagging metrics.

By the time such indicators exceed 75, a large portion of the strongest altcoin performance has often already occurred. Historically, the most asymmetric returns frequently emerge before the indicator fully confirms an altseason.

Therefore, low altseason readings today do not necessarily indicate that altseason will fail to arrive.

Rather, they suggest that liquidity remains concentrated in Bitcoin for now.

This sequence is natural.

Institutional capital almost always enters Bitcoin first. Bitcoin possesses the deepest liquidity, the longest market history, and the strongest ETF and custody infrastructure. BlackRock, Fidelity, and other major asset managers have primarily opened institutional access through spot Bitcoin ETFs.

As a result, Bitcoin dominance does not contradict the possibility of a future altseason.

Instead, it may represent the first stage preceding one.

The more important question is not whether this is already an altseason.

The real question is:

Under what conditions does liquidity concentrated in Bitcoin begin rotating into altcoins?

2. Korea’s Crypto Market Is Not Dead. It Is Waiting.

On the surface, Korea’s domestic crypto market appears weak.

According to Bank of Korea data cited by local media, crypto asset holdings across Korea’s five major exchanges fell from KRW 121.8 trillion at the end of January 2025 to KRW 60.6 trillion by the end of February 2026.

Average daily trading volume also collapsed from KRW 17.1 trillion in December 2024 to KRW 4.5 trillion in February 2026.

At face value, these figures suggest a market in deep decline.

However, another part of the same dataset deserves far greater attention.

Stablecoin balances across Korea’s five major exchanges increased from KRW 88.5 billion in July 2024 to KRW 872.3 billion by December 2025, before stabilizing near KRW 607.1 billion at the end of February 2026.

Compared to January 2025, stablecoin balances still remained roughly 2.2x higher.

In other words, speculative positioning declined, but sidelined liquidity remained inside the system.

The Financial Services Commission (FSC) and FIU’s second-half 2025 survey points in the same direction.

While trading activity weakened, KRW exchange deposits increased.

According to official figures across 27 registered Korean virtual asset service providers, KRW exchange deposits reached approximately KRW 8.1 trillion by the end of 2025, while the number of active trading accounts rose to roughly 11.13 million.

This distinction matters.

Trading volume measures current market heat.

Deposits and stablecoin balances measure re-entry potential.

Korea’s crypto market has cooled in terms of active speculation, but liquidity remains inside the system.

This resembles waiting behavior rather than full market abandonment.

Altseasons rarely begin when speculative activity is already overheated.

They often begin when positioning has cooled while liquidity never fully left.

The current Korean crypto market increasingly resembles that setup.

3. Korea Is One of the Most Important Variables in Altcoin Spot Markets

Korea matters more in altcoins than in Bitcoin.

Bitcoin pricing is primarily driven by ETF flows, institutional capital, and global derivatives markets. Altcoins, especially mid- and small-cap assets, behave differently because relatively thin spot liquidity creates significantly higher price elasticity.

This is why KRW-denominated spot markets may become one of the most important indicators for the next altseason.

Kaiko data highlights Korea’s unique positioning.

During Q1 2024, KRW-denominated crypto trading volume across centralized exchanges reached approximately $456 billion, surpassing USD-denominated spot volume at roughly $445 billion.

KRW consistently ranked among the world’s top fiat currencies by crypto spot trading activity.

Kaiko also emphasized that Korean market liquidity remains heavily concentrated around Upbit and Bithumb, which together account for approximately 96% of domestic trading volume.

In other words, Korea is not a small regional market.

It is a highly concentrated source of KRW-denominated spot liquidity.

The composition of trading activity matters even more.

Kaiko’s analysis suggests that Korean trading activity remains overwhelmingly concentrated in altcoins rather than Bitcoin or Ethereum. According to recent estimates, KRW trading pairs account for nearly 30% of global spot crypto volume, while roughly 85% of Korean crypto trading activity focuses on altcoins.

TRM Labs’ Q1 2026 global crypto adoption data reinforces this point.

Global retail crypto activity during Q1 2026 totaled approximately $979 billion, while Korean retail activity reached roughly $66.6 billion, ranking second globally behind only the United States.

Even amid declining global retail participation, Korea remains one of the world’s largest retail crypto markets.

Exchange-level data shows similar trends.

CoinMarketCap’s April 2026 exchange report estimated global spot trading volume at roughly $705.5 billion out of total crypto trading activity of $4.5 trillion.

Within spot-focused retail exchanges, Upbit continued maintaining meaningful global relevance.

Recent market concentration trends inside Korea are also notable.

While smaller exchanges lost significant liquidity during the KOSPI rally, remaining volume became even more concentrated inside major exchanges.

During May 2026, Coinone and Korbit saw trading volume decline roughly 78% and 92%, respectively.

Meanwhile, Upbit volume increased approximately 25%, while Bithumb volume fell only around 4%.

Combined market share between Upbit and Bithumb surpassed 97%.

This suggests that while total speculative heat weakened, the remaining KRW liquidity became even more concentrated within the largest trading venues.

Korean retail investors do not dominate global crypto markets overall.

But within altcoin spot trading, their influence is disproportionately large.

KRW markets maintain unusually high altcoin concentration, liquidity remains centralized within Upbit and Bithumb, and Korea continues to rank among the world’s largest retail spot trading markets.

As Bitcoin opens the upper range of the market and liquidity rotates toward large-cap altcoins, recovery in KRW altcoin trading volume across Upbit and Bithumb may become one of the clearest confirmation signals for the next altseason.

4. KOSPI 8,000 Is Not the Opposite of an Altseason

KOSPI 8,000 is the single most important variable in this report.

At first glance, it appears negative for crypto.

Part of the reason domestic crypto balances and trading activity declined is because Korean retail capital rotated into equities.

That much is true.

But interpreting KOSPI 8,000 purely as a competing asset class misses the possibility of delayed liquidity rotation.

The deeper meaning of the KOSPI rally is not simply equity strength.

It is the recovery of Korean retail risk appetite.

If investors were truly avoiding risk, it would be difficult for KOSPI trading volume and AI semiconductor equities to rally this aggressively.

Instead, capital has simply concentrated first in the most institutionally credible risk assets: AI semiconductor large caps.

On May 6, 2026, the KOSPI surpassed 7,000 for the first time in history before reaching 7,999.67 on May 12.

Samsung Electronics surged as much as 14.41% in a single day, while SK Hynix gained 10.64%.

This environment reflects Korean retail investors oscillating between FOMO and profit-taking pressure.

Of course, this rally cannot be explained by Korean retail investors alone.

Foreign capital and global hedge funds also played major roles.

As of May 7, hedge fund inflows into Korean, Japanese, and Taiwanese equities reportedly reached their highest levels in nearly a decade, with capital heavily concentrated around AI-related semiconductor and hardware companies.

Still, Korean retail participation remains important.

KOSPI 8,000 represents the convergence of global AI capital and domestic retail FOMO.

Even if institutions and foreign investors initiated the rally, late-cycle retail participants entering near local highs face a very different profit-and-loss structure.

If Samsung Electronics and SK Hynix eventually correct due to macro factors or institutional profit-taking, many late-entry retail investors may move into unrealized loss territory.

Behavioral finance becomes important here.

According to Kahneman and Tversky’s Prospect Theory, investors experiencing losses often become more willing to pursue higher-risk assets.

In other words, investors who suffer losses after chasing late-cycle momentum do not necessarily become defensive.

Some instead begin searching for higher-beta recovery trades.

In Korea, the capital rotation pathway is relatively predictable.

Liquidity initially concentrated in large-cap semiconductors can eventually rotate into KOSDAQ themes, AI, robotics, biotech, power equipment stocks, leveraged products, and ultimately KRW-denominated altcoins.

This path is particularly natural for investors who prioritize short-term momentum and turnover over long-term valuation investing.

For this reason, KOSPI 8,000 should not be viewed as evidence against an altseason.

In the short term, it absorbs crypto liquidity.

But in the medium term, it may function as one of the earliest leading indicators of renewed Korean retail risk appetite.

The key variable is not immediate substitution.

It is eventual high-beta rotation.

5. Which Altcoin Narratives Could Benefit Most?

1) The AI Semiconductor Narrative Can Expand Into Crypto

The rally in Samsung Electronics and SK Hynix is fundamentally driven by the AI growth narrative.

Importantly, this narrative is extremely intuitive for retail investors.

The improvement of generative AI is directly observable in daily life.

ChatGPT, Claude, Gemini, video-generation models, and workflow automation tools have transformed AI from an abstract theme into a visible consumer technology.

This naturally translated into semiconductor investment narratives.

Rising AI usage increases data center and GPU demand, which in turn drives HBM and high-performance memory demand.

As a result, Samsung Electronics and SK Hynix became viewed as direct beneficiaries of AI infrastructure expansion.

A similar narrative expansion can occur inside crypto.

Growth in the AI industry could increase demand for onchain data infrastructure, computation, verification, privacy, autonomous agents, and decentralized networks.

This does not mean every AI token possesses real utility.

Many projects remain heavily narrative-driven.

But during the early and middle stages of altseasons, easy-to-understand growth narratives often matter more than actual revenue generation.

Korean retail investors have already learned the framework:

AI growth → semiconductor beneficiaries

The next step could become:

AI growth → AI infrastructure, data, and agent-related crypto beneficiaries

If simplified investment narratives spread effectively through YouTube, Telegram, short-form content, and online communities, AI-related altcoins could generate disproportionately strong reactions inside KRW markets.

At this stage, narrative transmission matters more than technical superiority.

Korean retail investors embraced semiconductor momentum not because of detailed valuation modeling, but because the industrial growth story felt intuitive.

The same dynamic could emerge inside AI-related crypto sectors.

2) Tokenized Equities May Become the Most Intuitive Onchain Narrative for Korean Retail

Alongside AI, another major narrative likely to matter during this cycle is tokenized equities.

Korean retail investors already possess experience across Korean equities, U.S. equities, and 24/7 crypto markets.

Tokenized equities combine all three experiences into a single narrative.

The value proposition is relatively simple:

Global assets such as U.S. equities, ETFs, and commodities become tradable onchain, for longer hours, through stablecoin-based settlement.

Compared to complex DeFi structures or derivatives, this narrative is far easier for Korean retail investors to understand.

Investors already familiar with fractional U.S. stock trading, after-hours sessions, and overnight global equity access may naturally understand the appeal of 24/7 onchain equity markets.

Traditional finance is also increasingly moving in this direction.

ICE, the parent company of the NYSE, announced development of a tokenized securities platform capable of supporting 24/7 trading and onchain settlement.

The SEC has similarly emphasized that tokenized securities should not be treated as entirely separate from traditional securities markets.

In early 2026, the SEC stated that tokenized securities fundamentally represent existing securities in crypto-native form.

This matters because tokenized equities are not merely another crypto theme.

They increasingly represent the onchain extension of traditional financial infrastructure itself.

Ondo Finance represents one of the clearest examples.

Ondo Global Markets aims to bring traditional publicly traded securities onchain in tokenized formats usable within DeFi systems.

These products provide economic exposure linked to underlying public assets, including dividend-related returns.

Recently, Ondo GM surpassed $1 billion in TVL within tokenized equities.

This suggests that tokenized equities are evolving beyond pure experimentation into an asset category attracting meaningful capital.

xStocks represents another important example.

xStocks provides tokenized exposure to more than 100 U.S. equities and ETFs, including Apple, NVIDIA, and S&P 500-related products.

Since launch, xStocks reportedly surpassed $30 billion in cumulative volume and over 120,000 onchain holders.

These metrics suggest tokenized equities are generating real transactional and holding activity rather than existing purely as marketing narratives.

However, investors must still pay close attention to rights structures.

While tokenized equities may superficially resemble traditional stock trading, not all products provide equivalent ownership structures.

Some provide only synthetic economic exposure.

Others involve limitations around redemption rights, custody structures, voting rights, dividends, jurisdictional restrictions, or U.S. investor access.

Ignoring these distinctions could lead to severe misunderstandings around the tokenized equity narrative.

Nevertheless, from a narrative perspective, tokenized equities remain extremely powerful.

Korean retail investors are already familiar with both U.S. equities and 24/7 crypto trading.

Tokenized equities merge those two experiences.

If AI semiconductors represented “real-world beta for AI growth,” tokenized equities could increasingly become “onchain beta for global trading infrastructure.”

As a result, RWA, tokenized equity, and onchain securities infrastructure-related altcoins could occupy an important position within the upper narrative layer of the next altseason.

6. The CLARITY Act Could Compress Altcoin Discount Rates

One of the largest overhangs facing altcoins has historically been regulatory uncertainty.

Bitcoin secured institutional legitimacy through spot ETFs.

Altcoins, by contrast, remained burdened by uncertainty around securities classification, exchange listing risk, staking, airdrops, issuer liability, and protocol incentive structures.

That environment is gradually beginning to change.

On July 18, 2025, the United States formally enacted the GENIUS Act.

The White House described it as the first federal stablecoin regulatory framework in U.S. history, requiring full reserve backing and monthly reserve disclosures.

Meanwhile, the CLARITY Act has emerged as another critical variable.

White House digital asset advisers indicated that the administration is targeting roughly July 4, 2026 for progress on the bill.

This timeline should not be interpreted as guaranteed passage.

However, markets rarely wait for final legislation.

They begin pricing in expectations earlier through committee discussions, political signaling, compromise probability, and regulatory direction.

The evolving SEC and CFTC approach toward digital asset classification is also important.

Recent regulatory trends increasingly differentiate between categories such as digital commodities, stablecoins, collectibles, and tokenized securities rather than treating all tokens identically.

This effectively reduces the probability that every crypto asset will be treated as a security.

At the same time, tokenized equities and tokenized bonds remain more likely to be classified within traditional securities frameworks.

Importantly, regulatory clarity does not benefit all altcoins equally.

In fact, weaker tokens may face greater pressure.

Projects with opaque issuance structures or aggressive profit-sharing mechanics could encounter heightened regulatory risk.

However, large-cap infrastructure-focused altcoins may benefit from discount-rate compression.

If markets begin assigning lower probability to sudden regulatory classification risk, altcoins could experience greater beta expansion relative to Bitcoin.

This dynamic alone may not immediately trigger broad speculative rotation across smaller altcoins.

But it could function as a second-stage trigger following Bitcoin’s initial recovery, particularly benefiting large-cap infrastructure and institutionally explainable altcoins.

Over time, liquidity rotating into these assets could eventually spill further down into smaller KRW-denominated altcoins and low-liquidity speculative tokens.

7. 2026 Is the Final Full Pre-Tax Trading Year in Korea

Taxation is another uniquely important variable inside Korea.

Under revisions to Korea’s Income Tax Act, taxation on virtual asset income is currently scheduled to apply to transfers and lending activity beginning January 1, 2027.

This effectively makes 2026 the final full trading year before crypto taxation formally begins.

This is not simply a tax issue.

It is also a behavioral variable.

Korean investors have already experienced repeated debates around equity taxation, overseas stock taxation, and financial investment income taxes.

Crypto, by contrast, may increasingly be perceived as one of the final remaining high-beta asset classes operating under relatively favorable tax treatment.

If corrections emerge in large-cap KOSPI names and late-cycle retail investors begin searching for recovery trades, the psychological pressure associated with the “final pre-tax year” could further strengthen altcoin preference.

This matters not only for pre-tax returns, but also for expected after-tax asymmetry.

The possibility of an altseason in 2026 therefore extends beyond pure price momentum.

For Korean retail investors, crypto increasingly combines tax timing, 24/7 accessibility, volatility, and high-beta speculation into a single environment.

8. Venture Capital and Onchain Infrastructure Are Already Preparing for the Next Cycle

In May 2026, a16z crypto launched its new $2.2 billion Crypto Fund V.

This remains smaller than the $4.5 billion Crypto Fund IV raised in 2022.

But the significance is not the absolute size.

The significance is that large crypto-native venture funds are being raised again even while trading activity and altcoin sentiment remain depressed.

The 2022 cycle represented peak speculative overheating.

The 2026 environment increasingly focuses on infrastructure, productization, and long-term market architecture.

With Fund V included, a16z crypto’s cumulative capital commitments now approach roughly $9.8 billion.

Onchain infrastructure has also expanded significantly compared to prior cycles.

According to RWA.xyz, tokenized real-world asset markets across Ethereum, BNB Chain, Solana, Stellar, and other networks have already grown into multi-billion-dollar ecosystems.

CoinGecko’s RWA reports similarly noted that tokenized gold trading volume during Q1 2026 alone surpassed total volume recorded throughout all of 2025.

This cycle is no longer driven purely by exchange listings and speculative momentum.

CEXs, DEXs, perpetuals, stablecoins, RWAs, tokenized securities, and AI infrastructure are increasingly converging into a broader market structure.

More speculative behavior across smaller and lower-liquidity altcoins may still emerge in the later stages.

But the foundational infrastructure supporting this cycle is materially broader than before.

9. A Single Base Scenario

The altseason scenario outlined in this report is ultimately straightforward:

“Post-AI semiconductor rotation into KRW altcoin liquidity.”

This scenario unfolds across six stages.

Stage 1: Bitcoin Leads

ETF and institutional capital enters Bitcoin first.

BTC dominance remains elevated while altseason indicators remain low.

Markets interpret this as a Bitcoin-only cycle.

However, this stage does not contradict a future altseason.

Institutional capital naturally enters the deepest and most liquid asset first.

Stage 2: AI Semiconductor Rally and Korean Retail FOMO

KOSPI 8,000 emerges through the convergence of AI semiconductor momentum and Korean retail FOMO.

Samsung Electronics and SK Hynix become viewed as core beneficiaries of AI infrastructure expansion.

Korean retail investors directly participate in this rally, rebuilding overall risk appetite.

Stage 3: Large-Cap Corrections and Search for Higher Beta

If Samsung Electronics and SK Hynix eventually correct, many late-entry retail participants may move into unrealized losses.

Some capital rotates defensively.

But other investors begin searching for higher-beta recovery opportunities.

This rotation may flow into KOSDAQ themes, leveraged products, and KRW altcoin markets.

Stage 4: Recovery in Large-Cap Altcoins

As Bitcoin stabilizes and regulatory clarity improves, liquidity begins rotating into ETH, SOL, XRP, HYPE, and major AI/RWA-related infrastructure altcoins.

This stage is selective.

It is not yet indiscriminate altseason behavior.

Stage 5: Re-Ignition of KRW Altcoin Markets

As Korean retail risk appetite flows through KOSDAQ themes into KRW altcoin markets, trading volume across Upbit and Bithumb becomes the key confirmation signal.

KRW deposits and stablecoin balances remain inside the system.

The “final pre-tax year” dynamic also reinforces speculative participation.

At this stage, AI, RWA, tokenized equity, and stablecoin infrastructure narratives likely outperform first.

Stage 6: Smaller and Lower-Liquidity Altcoins

The final stage involves aggressive speculation in smaller and lower-liquidity altcoins.

Importantly, this is not the beginning of the altseason.

It is the confirmation stage.

Retail participants typically recognize the altseason only at this point.

From a research perspective, however, the true beginning occurs earlier, when KRW-denominated altcoin liquidity first starts recovering.

10. Risks and Key Variables

The largest risk remains a major Bitcoin drawdown.

Altseasons require Bitcoin stability.

If Bitcoin fails to maintain support near current levels and collapses sharply, liquidity rotation into altcoins would likely be delayed.

The second risk is prolonged KOSPI strength.

If Samsung Electronics and SK Hynix continue rallying without meaningful corrections, Korean liquidity may remain inside equities for longer.

In that case, the altseason timeline would shift later.

The third risk involves stablecoin interpretation.

Not all stablecoin supply represents speculative dry powder for altcoins.

Stablecoins also support payments, collateralization, settlement, and exchange operations.

Stablecoin market capitalization should therefore not be interpreted as entirely deployable speculative liquidity.

The fourth risk involves the selective nature of regulatory clarity.

Regulatory normalization does not benefit all tokens equally.

Some assets may actually face greater scrutiny.

Early beneficiaries are more likely to be large-cap infrastructure-oriented altcoins.

Conclusion: The Next Altseason Could Begin Inside Korean Retail P&L Psychology

The most important variable this cycle may not be Bitcoin itself.

Bitcoin has already opened the first door.

The more important question is what happens after Bitcoin.

Current data increasingly points in one direction.

Bitcoin has already absorbed ETF and institutional capital.

Altseason indicators remain low.

Global stablecoin supply exceeds $300 billion.

KRW exchange deposits and stablecoin balances remain inside Korea.

U.S. regulation is increasingly integrating stablecoins and digital asset market structure into traditional finance.

Korean crypto taxation is still scheduled for January 2027, making 2026 the final full pre-tax trading year.

And perhaps most importantly, KOSPI 8,000 confirms that Korean retail risk appetite has returned.

Previous altseason discussions focused primarily on Bitcoin dominance and global liquidity.

But this cycle increasingly requires analysis of Korean retail profit-and-loss psychology.

The AI semiconductor rally provided Korean investors with a directly understandable growth narrative.

Samsung Electronics and SK Hynix became “real-world AI beta.”

That same behavioral framework could increasingly transfer into crypto.

AI infrastructure, data, agents, privacy, and decentralized compute tokens may become positioned as “the next layer of AI beta.”

Tokenized equities matter for similar reasons.

Korean investors already understand Korean stocks, U.S. stocks, and 24/7 crypto trading.

Tokenized equities combine all three.

The familiarity of U.S. equities, combined with onchain accessibility and stablecoin settlement infrastructure, creates an unusually intuitive narrative.

Projects related to RWAs and tokenized equities, such as Ondo Finance, therefore deserve close observation.

However, investors must still carefully distinguish between rights structures, custody models, redemption mechanics, and economic exposure.

The next altseason will not arrive simply because Bitcoin rallied.

It may emerge because Korean retail investors are once again buying risk, and because that renewed risk appetite increasingly searches for higher volatility.

KOSPI 8,000 may represent the starting point.

Corrections in AI semiconductor large caps could place many late-entry retail investors into loss territory.

That loss-recovery demand may eventually rotate into KOSDAQ themes, leveraged products, and KRW altcoin markets.

As Prospect Theory suggests, investors experiencing losses sometimes become more willing to pursue higher-risk opportunities.

Korea’s unusually high retail turnover and strong altcoin preference could accelerate that process.

Therefore, the conclusion of this report remains straightforward:

The altseason is coming.

But its starting point will not be smaller speculative altcoins.

Bitcoin absorbs institutional capital first.

The AI semiconductor rally restores Korean retail risk appetite.

Large-cap altcoins and KRW markets respond next.

Smaller and lower-liquidity altcoins typically rally only after the broader altcoin cycle becomes obvious to the market.

The core battleground of the next altseason may not be global ETF markets alone.

It may increasingly become Korea’s KRW-denominated altcoin market itself.

Disclaimer

This material is provided for informational and research purposes only and does not constitute investment advice, nor is it intended to recommend the purchase, sale, or holding of any asset (including equities or tokens), or to replace independent investment judgment.

All views and analyses expressed herein are based on publicly available information and reasonable assumptions as of the time of writing, and are subject to change depending on market conditions, policy developments, or regulatory changes.

This research has been prepared independently and without any financial compensation, sponsorship, or incentives from any of the projects or their affiliated parties mentioned. However, the author or affiliated organization may have had prior commercial relationships with such projects, and potential conflicts of interest may exist. All opinions and interpretations presented in this material reflect the independent judgment of the author.

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Most crypto investors had been treating January 1, 2027 as the base-case scenario for taxation. Following the December 2024 amendment to the Income Tax Act, crypto taxation was deferred once again, and the National Tax Service (NTS) officially confirmed that taxation would apply to transfers and lending starting from January 1, 2027.

However, sentiment began to shift again from mid-March 2026. The People Power Party proposed a bill to abolish crypto taxation and, on March 25, held a public roundtable with the five major exchanges, bringing the issue back into the political agenda. While the law itself remains in place, the renewed political intervention has led the market to once again question whether another deferral is possible. This is not surprising, as the emergence of political pressure suggests that the system is not progressing in a stable or linear manner.

That said, it is important to clearly frame the current situation. The administrative side continues to operate under the assumption that taxation will proceed, while the political side has begun to apply pressure again. What is needed now is not a simple debate of pros and cons, but an analysis of why political actors are revisiting this issue at this timing, why institutional infrastructure continues to move forward regardless, and what the most realistic outcome is likely to be.

1. Why is the political side revisiting this issue now?

The official justifications presented by policymakers can be summarized as follows:

First is fairness. The proposed amendment to the Income Tax Act submitted on March 19 by Rep. Song Eon-seok argues that imposing a separate income tax on crypto assets, while financial investment income tax has been abolished, undermines fairness and consistency in the tax system. The same argument was reiterated during the March 25 roundtable with exchanges. Retail investors, who are not major shareholders, effectively do not pay capital gains tax on domestic equities, yet crypto assets would be subject to a 22% tax. The core framing here is not preferential treatment for crypto, but rather correcting imbalance relative to equities.

Second is feasibility. The same proposal highlights administrative challenges, such as determining acquisition costs for non-resident foreigners. Following the March 25 meeting, policymakers also publicly mentioned concerns raised by the industry, including insufficient preparedness by the National Tax Service and the risk of capital outflows to overseas exchanges. This argument does not rely solely on anti-tax sentiment, but directly challenges the executability of the system. Politically, this framing is effective. Compared to debates around fairness, the question of whether taxation can be properly enforced resonates more broadly, even with non-investors.

Third is political timing and voter considerations. Crypto taxation has already been deferred multiple times, and there is still time before implementation. Challenging it now carries lower political cost than reversing it after enforcement. At the same time, the narrative that “stocks are not taxed, but crypto is” is simple and compelling for retail investors. The fact that the ruling party went beyond proposing legislation and organized a public roundtable with exchange executives suggests an intention to elevate this issue into a broader political agenda. While this is an interpretation rather than a confirmed fact, recent messaging and timing support this view.

However, one important distinction must be made. Political signaling does not necessarily imply a strong conviction to fully abolish taxation. At this stage, while a repeal bill has been proposed and publicly highlighted, the opposition party has stated that internal consensus has not yet been reached. This suggests that the current move is less about final outcomes and more about reopening negotiations. It is therefore premature to interpret current political actions as definitive results.

2. While politics wavers, institutionalization continues

This is the key point. While political actors are revisiting taxation, administrative and institutional preparation is continuing without pause.

The National Tax Service is responsible for implementing and enforcing tax laws passed by the National Assembly. It is not a political decision-maker, but an execution body. Accordingly, the NTS is proceeding under the assumption that taxation will be implemented. It continues to operate a dedicated crypto taxation information page, clearly stating that taxation applies from January 1, 2027, and has already established frameworks for data submission, reporting forms, and reference materials. From an administrative standpoint, this is no longer a “planned system,” but a system actively under preparation.

The level of preparation is also concrete. On March 20, 2026, a public procurement notice was posted for the “Integrated Crypto Asset Analysis System” project. The NTS is the contracting authority, with a project budget of approximately KRW 2.998 billion. Proposal submissions are scheduled for April 7 to 9, with delivery required within 240 days of contract signing. This is not exploratory work, but active system development. In other words, while political actors debate whether to proceed, tax authorities are preparing as if implementation will occur.

The broader direction of the NTS aligns with this. In its 2026 operational plan, the NTS emphasized stable tax revenue collection, fair taxation, combating offshore tax evasion, and enhancing data analysis capabilities. While not specific to crypto, this reflects a general approach of strengthening enforcement rather than scaling back planned taxation. Crypto taxation should be viewed within this broader trajectory.

The Financial Services Commission (FSC) also plays a critical role. While it does not directly impose taxes, it determines which entities operate within the regulatory framework and what transaction flows become visible. Under the FSC, the Financial Intelligence Unit (FIU) oversees anti-money laundering (AML), analyzing financial data and supervising compliance. In the crypto market, AML infrastructure effectively makes transactions visible enough for taxation.

According to the FIU’s February 2026 AML plan, strengthening crypto AML systems is a key priority. This includes improving AML frameworks for stablecoin issuers, addressing risks related to overseas operators and self-custodied wallets, and enhancing visibility into transaction flows. While not tax law itself, this infrastructure increases traceability, which is essential for taxation. In other words, while politics questions taxation, financial authorities are simultaneously increasing the system’s ability to support it.

Internationally, the direction is the same. According to OECD documents, Korea is among the countries committed to initiating the Crypto-Asset Reporting Framework (CARF) in 2027. CARF enables automatic exchange of crypto-related tax information between jurisdictions. Once implemented, hiding assets through overseas exchanges will become significantly more difficult. While adoption speeds will vary across countries, the key point is that Korea is already aligned with this global framework. Even if domestic political debate continues, externally, Korea is positioning itself as a taxation-ready jurisdiction.

3. The outcome is likely “modified implementation,” not repeal

The most realistic conclusion at this stage is not full repeal, but modified implementation.

While political momentum for repeal has increased, administrative bodies, financial regulators, and international frameworks are all moving toward 2027 implementation. After establishing data systems, AML infrastructure, and international commitments, abandoning the system entirely would carry significant political and administrative costs.

From a political perspective as well, modification is easier to justify than repeal. Adjustments can be framed as improving fairness or addressing practical concerns. Therefore, the current situation is less about “implementation vs repeal” and more about how the system will be adjusted before implementation.

There are already early signals on what this “modified implementation” could look like.

The most immediate and realistic adjustment being discussed is an increase in the basic exemption threshold. Under the current framework, taxation applies to gains exceeding KRW 2.5 million annually. However, in a March 25 report, Hwang Seok-jin, an advisory member of the Democratic Party’s Digital Asset Task Force, noted that while taxation itself is necessary, the exemption threshold should be raised to at least KRW 20 million.

While this is not an official policy proposal, but rather an expert opinion, it is widely viewed as one of the most practical adjustment levers currently available. In a political environment where fairness relative to equities has become a central issue, maintaining the implementation timeline while raising the threshold offers a way to reduce the burden on retail investors without abandoning the taxation framework altogether.

A second likely adjustment is a more realistic definition of the enforcement scope. The most significant practical challenges today lie in areas that are inherently difficult to track and evaluate, such as overseas exchanges, self-custodied wallets, acquisition cost calculations for non-residents, and complex DeFi transactions. Notably, even the rationale behind the proposed repeal bill points to administrative difficulties, particularly in determining acquisition costs for foreign investors.

Given these constraints, a full rollback of the system appears less likely than a phased approach. A more plausible path would be to first establish clear taxation around transactions conducted through domestically regulated exchanges, while gradually expanding coverage to overseas transfers and self-custodied wallets as data infrastructure and international information-sharing frameworks mature. This is not based on any finalized policy, but rather a reasonable inference based on current institutional limitations and policy debates.

A third area of adjustment is the refinement of rules around acquisition cost and edge-case transactions. The National Tax Service has already acknowledged scenarios where verifying acquisition costs is difficult and has delegated certain criteria to presidential decree. This suggests that the system is not yet fully finalized and still leaves room for further clarification before implementation.

As such, “modified implementation” is unlikely to be limited to raising the exemption threshold alone. It will likely involve more granular rule-setting around acquisition cost calculations, cross-border transfers, and the classification of ambiguous transaction types, ensuring that taxation is not only theoretically defined but also practically enforceable.

4. What will modified implementation likely look like?

Based on recent political signals, administrative preparation, and practical constraints raised by the market, the direction is becoming clearer.

While the ruling party has reopened the debate around fairness, capital outflows, and administrative readiness, the National Tax Service continues to build out its enforcement infrastructure. Politics is wavering, but administration is moving forward. This makes a full repeal unlikely, with the outcome leaning toward modified implementation.

1) Maintain the timeline, but raise the exemption threshold

The most likely adjustment is to keep the 2027 timeline while significantly increasing the exemption threshold. Rather than abandoning taxation, policymakers can address fairness concerns by effectively excluding small and retail investors. Raising the threshold is the simplest and most realistic compromise.

2) Start with domestic exchanges

Given practical limitations, enforcement will likely begin with transactions on domestically regulated exchanges, where data is already available. Overseas exchanges and self-custodied wallets are more difficult to track and will likely be incorporated gradually.
Implementation may be immediate, but enforcement will be phased.

3) Soft enforcement in the early stage

Even if the system starts in 2027, early enforcement is likely to focus on compliance and data accumulation rather than strict penalties. More complex transaction types will be addressed over time as rules and infrastructure mature.
Legal implementation and strict enforcement are not the same.

Conclusion

January 1, 2027 remains a valid timeline. However, it no longer implies implementation in its original form.

Since March 2026, political actors have reintroduced the issue, shifting the focus from whether taxation will happen to how it will be structured. While the ruling party raises concerns around fairness and feasibility, the opposition has not fully aligned on repeal, and administrative institutions continue preparing for implementation.

Given this combination, the most likely outcome is not full repeal, but modified implementation.

For investors, the key variables are threefold: the level of the exemption threshold, the order in which different transaction types are taxed, and the intensity of early enforcement. Ultimately, the most impactful factor for the market will not be whether taxation occurs, but how it is designed.

At this stage, Korea appears to be moving not toward abandoning taxation, but toward refining it and integrating it into the formal financial system.

Disclaimer

This material is provided for informational and research purposes only and does not constitute investment advice, nor is it intended to recommend the purchase, sale, or holding of any asset (including equities or tokens), or to replace independent investment judgment.

All views and analyses expressed herein are based on publicly available information and reasonable assumptions as of the time of writing, and are subject to change depending on market conditions, policy developments, or regulatory changes.

This research has been prepared independently and without any financial compensation, sponsorship, or incentives from any of the projects or their affiliated parties mentioned. However, the author or affiliated organization may have had prior commercial relationships with such projects, and potential conflicts of interest may exist. All opinions and interpretations presented in this material reflect the independent judgment of the author.

The final responsibility for any investment decisions rests solely with the reader. The author assumes no legal liability for any outcomes resulting from reliance on this content.

Terms of Use

Exilist permits the fair use of its research materials for non-commercial and informational purposes, provided that the original meaning and analytical context are preserved.

Proper attribution to Exilist is required when referencing or citing this publication.

Any form of republication, translation, modification, commercial distribution, or derivative use of this material, in whole or in part, requires prior written consent from Exilist.

Unauthorized commercial use, misrepresentation of analytical conclusions, or distribution without proper attribution may result in legal action.

Executive Summary

The competitive landscape of tokenized equities is not determined by who lists the most assets first. Rather, it is defined by who can most convincingly integrate rights structures, real-world asset backing, clearing and settlement infrastructure, and onchain liquidity into a coherent system.

From this perspective, Ondo GM demonstrates strength in collateralization, verification, and multi-chain distribution. Robinhood, on the other hand, is strongest in regulated distribution through a retail-native application layer. However, the largest long-term upside likely resides with xStocks. This is because xStocks sits closest to the intersection between permissionless onchain liquidity and the onshore tokenization infrastructure currently being developed by Nasdaq.

From an investor standpoint, a more important point is that these three platforms do not implement the same type of “tokenized stock.” Ondo GM is structured as a debt security in the form of a structured note, xStocks operates as an asset-backed tracker certificate, and Robinhood offers an OTC derivative contract represented through tokens. As a result, the growth of tokenized equities should not be assumed to benefit all three equally. The direction of market expansion—whether toward DeFi integration, regulated brokerage expansion, or onshore rights-equivalent systems connected to DTCC/DTC—will determine where value ultimately accrues.

In conclusion, the policy and infrastructure trajectory of 2026 is moving away from pure permissionless expansion and toward the question of how permissionless systems can connect with onshore, rights-equivalent frameworks. In this context, xStocks represents the most aggressive upside option, Ondo GM offers stronger current scale and defensiveness, and Robinhood should be understood less as onchain financial infrastructure and more as a brokerage model that absorbs tokenization into a retail application.

Introduction

Tokenized equities appear to be a single asset class, but in reality they encompass multiple distinct legal formats under the same label. Some are structured as debt securities in the form of structured notes, others are certificates backed by real equities, and still others are derivative contracts distributed through brokerage applications. While they may all appear as “stock tokens” on the surface, their legal substance and rights structures are fundamentally different.

Therefore, similarity in price behavior should not be mistaken for equivalence. Exposure to the same underlying equity—such as Apple—can carry entirely different implications depending on whether the asset represents direct ownership, a tracker certificate, or a contractual claim against a platform. What matters is not which platform is more well-known, but what the token legally represents, what it is backed by, what rights it confers, and who ultimately controls it.

Competition in tokenized equity infrastructure cannot be reduced to a purely technological race. On one side, there is a push toward permissionless global distribution and DeFi integration. On the other, the United States is advancing an onshore model that preserves existing financial infrastructure while incorporating token formats. Robinhood operates between these approaches, emphasizing brokerage UX to translate tokenization into a consumer-facing financial product. The current market is not converging toward a single winner, but rather reflects the coexistence of three competing design philosophies.

Permissionless systems, in simple terms, allow assets to move freely and be traded by anyone with a wallet. Onshore systems, by contrast, operate within regulatory jurisdictions such as the United States. Rights-equivalent structures imply that tokenized assets must preserve the same rights as traditional equities, including dividends, voting, shareholder registry linkage, and corporate action handling.

In this sense, the direction being pursued by U.S. regulatory frameworks—combining permissionless mobility with onshore regulatory compliance and full rights equivalence—represents a highly complex objective. At present, most tokenized equity infrastructures do not simultaneously satisfy all three conditions.

Debt-based tokenized equities, such as Ondo GM, represent obligations by the issuer to deliver returns linked to underlying assets. Rather than granting ownership, they promise to replicate economic exposure. In such structures, tracking accuracy is important, but so are the safety of the issuance structure and the sufficiency of collateral.

Asset-backed tracker models, such as xStocks, are not synthetic exposures but certificates backed 1:1 by real equities. While users do not hold shares directly in their own name, the underlying assets are held in custody, and the certificate reflects their value with a priority claim structure. This design sacrifices certain shareholder rights but enables greater transferability and usability in onchain environments.

Derivative-based tokenized equities, such as those offered by Robinhood, represent contractual exposure derived from underlying assets. Users do not own shares but instead hold rights under an OTC derivative contract with the platform. In this case, the primary risk is not just the underlying equity but also counterparty risk.

Robinhood’s model can also be interpreted as a brokerage framework. Rather than treating tokenized equities as onchain assets, it packages them as consumer financial products within an application. While this enables familiar UX and rapid distribution, it limits composability and self-custody.

1. The Real Comparison Is Not Tokens, But Product Formats

The ambiguity of the term “tokenized equities” is the first critical issue. Under the same label, an asset may legally be a debt security, a tracker certificate, or a derivative contract. This distinction is not merely semantic. It determines how dividends are distributed, whether voting rights exist, whether physical redemption is possible, who holds priority in bankruptcy, and how regulators classify the instrument.

For investors, the key question is not whether an asset behaves like a stock, but what rights are being forfeited in exchange for convenience.

The first point of differentiation is shareholder rights. Ondo GM provides economic exposure but does not grant voting or information rights. xStocks also does not provide direct ownership of underlying shares and does not grant voting or cash dividend claims. Robinhood is even more explicit: users hold contractual rights against Robinhood Europe rather than equity ownership. While none of the three platforms provides direct ownership of shares, the degree of separation from underlying assets differs significantly. Ondo GM and xStocks maintain stronger links to backing assets, whereas Robinhood operates primarily through contractual exposure.

2. Ondo GM: A Structured Note Model Anchored in Collateral and Verification

However, this model comes with trade-offs. Reliance on Reg S exemptions introduces structural limitations on U.S. participation. Dividend flows are subject to withholding tax, which can reduce net returns for token holders. Costs are not always explicit, but are embedded within bid-ask spreads and execution pricing.

Ultimately, Ondo GM represents a structure that prioritizes strong collateral narratives and global distribution, at the expense of shareholder rights, onshore accessibility, and certain aspects of net yield.

3. xStocks: From Certificate-Based Trackers to an Onchain Liquidity Layer

xStocks differs from exchange-issued token models by separating issuance from distribution. The underlying instrument is a certificate issued by a dedicated entity, while crypto platforms provide trading, distribution, and custody interfaces. The legal structure is defined under European prospectus frameworks, with disclosures covering issuer structure, jurisdiction, service providers, and security agents. Supported token standards include Solana SPL and ERC-20.

One of the key differentiators lies in how economic rights are transmitted. Rather than distributing cash dividends, xStocks reinvests them into the token structure, adjusting its multiplier accordingly. This design allows dividend effects to be reflected in token value rather than cash flow, making it more compatible with onchain financial use cases such as collateralization, lending, and liquidity provision.

A critical development occurred when Kraken acquired Backed Finance, the issuer behind xStocks. This brings issuance, distribution, and liquidity layers into closer alignment under a single ecosystem. The significance lies not only in scale, but in coordination. When these layers are unified, fee structures, spread policies, incentives, and infrastructure development can be aligned into a single strategic direction.

As a result, xStocks is evolving beyond a standalone product into a potential onchain equity liquidity network.

4. Robinhood: Tokenization as an Extension of Brokerage Products

Robinhood’s tokenized equities have the clearest legal definition among the three. They are OTC derivative contracts provided by Robinhood Europe UAB. Users do not own shares or certificates, but hold contractual exposure to price movements.

The token functions primarily as a representation layer rather than the asset itself. While each token corresponds to an underlying share or unit in price terms, it does not grant redemption rights or shareholder privileges.

The strength of this model lies in distribution. Robinhood offers over 200 tokenized equities and ETFs to European users, initially using Arbitrum L2, with plans to expand into its own infrastructure. The focus is not on building DeFi-native financial primitives, but on delivering a seamless and familiar user experience.

However, the limitations are equally clear. Counterparty risk is concentrated in a single entity, investor protections are limited, and the product carries a high risk classification under European standards. While effective as a distribution model, it lacks the composability and self-custody features that characterize onchain financial assets.

5. Scale and Chain Distribution: Where Is Real Usage Happening?

From an onchain perspective, the most objective measure of scale is total value locked (TVL). Ondo GM currently stands at approximately $654 million, while xStocks is at around $262 million.

Ondo GM’s liquidity is distributed across multiple chains, with approximately $419 million on Ethereum, $216 million on BNB Chain, and $17.2 million on Solana. In contrast, xStocks is almost entirely concentrated on Solana.

Robinhood, by comparison, does not operate within public DeFi TVL frameworks. Instead, its scale is better understood through product distribution, user base, and geographic reach. Based on available reporting, it serves approximately 150,000 users across around 30 countries.

These figures reveal more than just current market share. Ondo GM reflects strong distribution across EVM ecosystems and alignment with institutional custody infrastructure. xStocks, on the other hand, reflects concentrated usage within a high-performance, low-cost environment, enabling dense onchain activity. Ondo GM is therefore stronger in multi-chain reach and defensiveness, while xStocks is stronger in the intensity of onchain usability.

Robinhood operates outside of this comparison. Its competitive axis is not TVL, but rather user conversion, engagement, and the ability to absorb tokenized exposure into a brokerage experience.

Differences in token standards and transferability further reinforce this divergence. Ondo GM maintains consistent economic exposure across chains, though representation may vary by network. xStocks explicitly adopts transferable token standards such as SPL and ERC-20, with minimal restrictions, reflecting a design philosophy oriented toward permissionless movement and DeFi integration. Robinhood, even when using blockchain infrastructure, ultimately operates through application-level contracts, where positions are opened and closed within the platform.

In this sense, Ondo GM and xStocks are fundamentally onchain assets, while Robinhood represents a brokerage product with an onchain representation layer. Even within the same “tokenized equity” category, composability differs significantly.

6. Revenue Structures and Fee Models: Where Does the Platform Capture Value?

Ondo GM does not charge explicit minting or redemption fees, but its economics are embedded within pricing spreads. The execution price may deviate from the underlying asset price, with the difference captured by the platform.

For example, if the reference price of an underlying equity is $100, but Ondo GM quotes a purchase price of $100.40, the investor effectively pays a 0.40% implicit cost. While no explicit fee is displayed, the spread functions as a pricing mechanism through which value is captured.

In Ondo GM’s structure, price appreciation and reinvested dividend effects accrue to token holders, while spread-based revenue accrues to the platform.

xStocks operates a more layered model. Within Kraken’s exchange environment, certain trading pairs such as USD-based pairs may be offered with zero trading fees. However, standard fees and spreads apply when using other assets. Additional layers include conversion fees, such as the 1% fee in Kraken Pro’s Convert function, as well as embedded product-level fees defined in the prospectus.

Beyond centralized exchange activity, xStocks also interacts with external infrastructure such as Bybit, Raydium, Orca, and Phantom Wallet, where additional fees are determined by those platforms. While direct transaction fees may not always be explicit, xStocks incorporates issuer-level and product-level fee structures.

Importantly, xStocks integrates these costs into a broader incentive system. The introduction of programs such as xPoints reflects an attempt to offset friction through ecosystem rewards, effectively redistributing part of the economic capture back into liquidity growth.

Robinhood presents its fee structure more directly. Entry and exit fees are capped at approximately 0.10%, and foreign exchange conversion is embedded in the transaction process. While external messaging may emphasize commission-free trading, the product documentation indicates that revenue is primarily generated through derivative pricing, FX spreads, and platform-level margins.

Dividends are not received as shareholder distributions, but rather reflected through contractual adjustments or cash flows within the derivative framework. This reinforces the distinction: Ondo GM operates as a structured product, xStocks as a liquidity network with layered monetization, and Robinhood as a brokerage-driven derivative platform.

7. What Regulation Actually Favors: The U.S. Perspective on Tokenized Equities

As of March 2026, regulatory signals from the SEC and CFTC indicate a consistent principle: digital assets may be classified more flexibly, but digital securities remain securities. Representing a stock as a token does not reduce regulatory requirements. Instead, it introduces additional challenges in maintaining equivalence.

The key requirement is ensuring identical rights, transparency, market surveillance, and settlement processes. Permissionless distribution alone is insufficient for integration into onshore financial systems.

This is where broader legislative developments become relevant. The GENIUS Act introduces stricter requirements for stablecoin reserves and disclosures, effectively aligning onchain payment rails with regulated financial infrastructure. This matters because tokenized equities cannot operate independently of their settlement layer. Dividend distributions, corporate actions, and payments all depend on compliant financial rails.

The CLARITY Act, focused on market structure, further influences incentive design, including restrictions around stablecoin-based rewards. Together, these frameworks indicate that the future of tokenized equities will be shaped not only by token design, but by the integration of regulated payment systems.

Under these conditions, the regulatory preference becomes clearer. Systems that preserve rights equivalence, maintain standardized identifiers such as CUSIPs, integrate with existing clearing infrastructure like DTCC/DTC, and allow controlled transfer through approved wallets are more likely to align with onshore requirements.

From this perspective, Ondo GM and xStocks, despite strong asset backing, remain primarily offshore or global distribution models. Robinhood operates as a brokerage-layer wrapper. None fully match the onshore, rights-equivalent model currently favored by U.S. infrastructure.

The key question is not whether these platforms fit today’s model, but which one can evolve toward it.

8. The Nasdaq–DTC Pilot: Not Tokenization of Markets, but Tokenization of Format

The recent Nasdaq rule change approved by the SEC does not represent a shift toward fully onchain markets. In fact, it suggests the opposite.

Tokenized equities within this framework must remain within the DTC system, maintain identical rights and identifiers as traditional equities, and settle through existing clearing infrastructure. This is not an attempt to replace the system, but to extend it by introducing token formats.

In other words, the U.S. approach is not to build a parallel market, but to embed tokenization within the existing one.

For investors, the key question becomes straightforward: which platform is structurally closest to this model?

Robinhood, as a European derivative-based platform, is structurally distant. Ondo GM, while strong in collateralization, does not provide rights equivalence due to its structured note format.

However, Ondo should not be viewed solely as an offshore player. Through its acquisition of Oasis Pro, it has secured key components of U.S. infrastructure, including a registered broker-dealer, an alternative trading system (ATS), and transfer agent capabilities. Its confidential SEC filing in early 2026 further suggests an intention to align with onshore frameworks.

xStocks, while not yet rights-equivalent, combines real asset backing with permissionless distribution infrastructure. Importantly, Nasdaq has explicitly referenced xStocks as a potential counterparty in its design framework. Nasdaq describes its tokenized equity model as preserving issuer rights while aligning legal and operational structures with traditional equities.

While it is too early to conclude that xStocks represents the final onshore solution, it is currently one of the closest candidates positioned at this intersection.

9. Nasdaq–Payward (Kraken)–xStocks: The Most Critical Connection

The most important development in this landscape is Nasdaq’s issuer-sponsored equity token design. This model aims to link official shareholder registries with onchain records, ensuring that token transfers correspond directly to underlying equity ownership.

Within this framework, Nasdaq explicitly references collaboration with Payward, Kraken’s parent company, and xStocks infrastructure to build an “equities transformation gateway” connecting permissioned and permissionless markets. The target timeline is the first half of 2027.

This represents a fundamental shift. Until now, tokenized equities have been divided between offshore DeFi-oriented systems and regulated brokerage models. Nasdaq introduces a third path: maintaining traditional market structures while integrating onchain transferability.

In this model, xStocks is not simply a product, but a potential bridge layer connecting two previously separate systems.

From an investment perspective, this is critical. The long-term winner in tokenized equities will not be determined solely by trading volume. It will depend on the ability to integrate onshore regulated assets, permissionless liquidity, stablecoin settlement, and legal alignment with issuance and transfer systems.

xStocks is not yet a complete solution, but it is positioned at the intersection of these components.

Ondo GM may currently offer stronger scale and defensiveness, but its connection to onshore infrastructure is less explicitly defined. While Ondo is actively building toward this direction, the xStocks–Nasdaq connection is currently more direct and formally articulated.

10. What the DTC Pilot Implies About the Next Generation of Platforms

The DTC no-action framework suggests that future platforms may be more conservative than expected.

Transfers may be restricted to approved wallets. Initially, tokens may not carry collateral or settlement value. Corporate actions may eventually be processed through stablecoins or tokenized deposits.

This implies that the first generation of onshore tokenized equity platforms will not be fully permissionless. Instead, they will likely adopt a partially open model that balances accessibility with regulatory compliance.

This shifts the competitive landscape. Ondo GM and xStocks are strong because they address current onchain user demand. Robinhood is relevant because it captures retail distribution.

However, the next phase of infrastructure prioritizes rights equivalence, controlled transfer, corporate action handling, and integration with existing systems. This creates a new category where bridge-layer participants become increasingly valuable.

11. NYSE–Securitize and Alternative Launch Pathways

While Nasdaq’s approach focuses on integrating tokenization into existing infrastructure, the NYSE–Securitize partnership represents a different path.

This model explores the possibility of dedicated digital venues for tokenized securities, with Securitize acting as a blockchain-based transfer agent and NYSE contributing regulatory and operational frameworks. It also introduces the possibility of 24/7 trading and stablecoin-based instant settlement.

These two approaches represent parallel paths. One extends the existing system through token formats, while the other builds new infrastructure for digital securities.

As the market evolves, both paths are likely to coexist. In this context, platforms like xStocks may extend beyond DeFi-native environments and connect with both models. Ondo GM is more likely to remain a strong offshore distribution hub, while Robinhood continues to focus on consumer-facing expansion.

Conclusion

Comparing these three platforms as direct competitors oversimplifies the landscape. While they appear to operate within the same category, they address fundamentally different problems.

Ondo GM focuses on trust and verification in offshore tokenized equities. Robinhood translates tokenization into a consumer-friendly brokerage experience. xStocks attempts to integrate real asset backing, onchain liquidity, exchange distribution, and potential connections to onshore infrastructure.

From an investment perspective, the framework becomes clearer. Ondo GM offers strong current defensiveness and scale. Robinhood dominates retail distribution. However, xStocks presents the most asymmetric upside, particularly if tokenized equities evolve toward a model that connects permissionless liquidity with onshore, rights-equivalent infrastructure.

That said, this upside is contingent on execution. Nasdaq’s framework remains in development, with a target timeline of 2027. The DTC pilot remains conservative in scope. As a result, xStocks carries both higher upside and higher implementation risk.

Ultimately, the defining question is not who tokenizes equities first, but who successfully integrates regulatory compliance, real asset backing, settlement rails, and onchain liquidity into a unified system.

Disclaimer

This material is provided for informational and research purposes only and does not constitute investment advice, nor is it intended to recommend the purchase, sale, or holding of any asset (including equities or tokens), or to replace independent investment judgment.

All views and analyses expressed herein are based on publicly available information and reasonable assumptions as of the time of writing, and are subject to change depending on market conditions, policy developments, or regulatory changes.

This research has been prepared independently and without any financial compensation, sponsorship, or incentives from any of the projects or their affiliated parties mentioned. However, the author or affiliated organization may have had prior commercial relationships with such projects, and potential conflicts of interest may exist. All opinions and interpretations presented in this material reflect the independent judgment of the author.

The final responsibility for any investment decisions rests solely with the reader. The author assumes no legal liability for any outcomes resulting from reliance on this content.

Terms of Use

Exilist permits the fair use of its research materials for non-commercial and informational purposes, provided that the original meaning and analytical context are preserved.

Proper attribution to Exilist is required when referencing or citing this publication.

Any form of republication, translation, modification, commercial distribution, or derivative use of this material, in whole or in part, requires prior written consent from Exilist.

Unauthorized commercial use, misrepresentation of analytical conclusions, or distribution without proper attribution may result in legal action.

This research compares the relative beneficiary structures of Coinbase (NASDAQ: COIN) and Circle (NYSE: CRCL) under two legislative developments: the GENIUS Act, enacted in July 2025, and the market structure bills in the CLARITY Act family, which had advanced to a meaningful stage of Senate discussion by 2026.

At the outset, one point should be made clearly. Greater regulatory clarity in the U.S. is structurally positive for both Coinbase and Circle, and the two companies have a complementary relationship within the stablecoin economy. This is not a comparison of pure competition.

What matters from an investor’s perspective, however, is not simply whether both benefit, but how directly that benefit translates into each company’s earnings and valuation. This piece is intended to compare exactly that: the relative directness and intensity of the benefit.

Executive Summary

Both the GENIUS Act and the CLARITY Act are legislative efforts pushing forward the institutionalization of the U.S. digital asset industry, and both Coinbase and Circle are beneficiaries of greater regulatory clarity. But these laws do not apply to them in the same way.

• Coinbase (NASDAQ: COIN) is a comprehensive digital financial platform aiming toward the “Everything Exchange,” spanning exchange, brokerage, custody, onchain platform services, the Base network, and more.

• Circle (NYSE: CRCL) is a company focused on stablecoin issuance, reserve asset management, and the expansion of payment and settlement networks.

What the GENIUS Act settled first was not the framework for exchanges or platform operators, but the framework for permissioned stablecoin issuers. In that respect, Circle is the company that entered the institutional framework first. Coinbase, by contrast, remains a company that must continue adjusting its trading, brokerage, custody, rewards, and tokenized asset strategy depending on the final language of the CLARITY Act.

The logic of stock price premium diverges here as well. Coinbase reported $6.883 billion in net revenue in 2025, of which $4.055 billion, or about 59%, came from transaction revenue. The company also discloses that its revenue remains significantly dependent on crypto asset prices and platform trading volumes. In other words, Coinbase is still a company whose performance is heavily influenced by market activity and the normalization of market structure. Of course, when the bull market returns and trading volume surges, its operating leverage can be extremely powerful.

Circle, by contrast, derived 96% of its $2.747 billion in 2025 total revenue from reserve income, and the company guided for 40% mid-to-long term growth in USDC circulation and an RLDC margin of 38% to 40%. In other words, Circle is a company whose upside is determined by stablecoin institutionalization and the resulting expansion in circulation.

Before comparing the value of the two businesses, one point must be emphasized. Coinbase and Circle are core partners in the USDC ecosystem. Circle is the issuer of USDC, but it does not monopolize the economics of the USDC economy. Through the Collaboration Agreement, Coinbase receives an economic share of Circle’s reserve income. In addition, Coinbase’s share of USDC platform holdings expanded from 5% in 2022 to 12% in 2023 and 20% in 2024. That means the current USDC economy is not a structure captured by Circle alone, but one built jointly by Circle and Coinbase.

If Circle grows, Coinbase grows with it. If Coinbase grows and expands USDC circulation and holdings on its platform, Circle’s reserve base and reserve income also grow. And when that income grows, Coinbase’s share under the Collaboration Agreement grows as well.

Even so, there is still a clear reason to assign a higher score to Circle in the current phase. It is more straightforward to identify which company connects policy benefit to earnings through the more intuitive path.

As stablecoin institutionalization deepens, the barriers to entry for issuers are likely to rise further. Permissioned issuer status, 1:1 reserves, disclosures and verification, and regulatory response capability are all required. In that structure, the issuer that enters the institutional framework first gains a first-mover premium. That is precisely where Circle’s strength lies.

At present, Circle is growing the USDC economy in a mutually beneficial relationship with Coinbase, and in the short term it still has a relatively high level of Coinbase dependence. Over the longer term, however, as more exchanges, fintech platforms, payment partners, and institutional settlement channels are onboarded, the reserve income generated by expanding stablecoin circulation connects more directly to Circle. In that process, dependence on any single partner can be relatively diluted. In addition, when issuer status is combined with seigniorage and economies of scale, Circle’s upside can extend well beyond circulation growth alone.

This is also visible in industry precedent. Tether, the issuer of USDT, is already a leading example of how profitable the stablecoin issuance business can be. Tether continues to generate overwhelming protocol revenue, while disclosing $13 billion in net income and $113 billion in U.S. Treasury exposure, demonstrating that reserve asset management is the core profit engine of a stablecoin issuer.

Circle is not merely an issuer that emphasizes profitability. It is an issuer that has also accumulated regulatory compliance and institutional suitability. As U.S. regulatory clarity and institutionalization advance in earnest, Circle is increasingly likely to secure a position not just as a stablecoin issuer, but as an unprecedentedly central issuer within institutional payment infrastructure.

1. Introduction

The U.S. digital asset industry has long grown under a structure in which legal definitions and supervisory frameworks lagged behind the pace of technological innovation. Exchanges, stablecoin issuers, custodians, and onchain infrastructure operators all faced a similar problem. It was often unclear which assets were securities, which were commodities, and which were payment instruments. As a result, companies operated under enforcement-based uncertainty, in other words, under a condition where regulators could later decide to challenge what they had already built. This was more than a legal problem. It translated directly into valuation discount.

But that structure began to change rapidly after 2025. First, the GENIUS Act was enacted, effectively defining stablecoins as a separate asset category under federal law. Then the CLARITY Act family of market structure bills advanced to the point where formal Senate review schedules were publicly announced. What matters here is not simply the general observation that regulation is arriving. The more important question is which regulation causes economic benefit to accrue where. Even the same regulatory clarity may not benefit a stablecoin issuer and an exchange in the same way.

Coinbase and Circle are the most appropriate comparison for this question. Both are frequently cited as major beneficiaries of U.S. digital asset institutionalization, but their business structures and earnings formulas are fundamentally different. Coinbase is a broad platform company spanning trading, brokerage, custody, institutional services, and onchain platform expansion. Circle, by contrast, is closer to stablecoin issuance, reserve asset management, and payment and settlement networks. As a result, even under the same legal environment, the form and intensity of benefit are bound to differ.

The key question is not which is the better company in the abstract, but which is more likely to receive the more direct institutionalization premium in a world where GENIUS is already in force and CLARITY is moving forward. To answer that question, this piece proceeds in the following order.

• First, it reviews the U.S. regulatory landscape and the shift in investor perspective.

• Second, it compares the business, financial, and asset structures of Coinbase and Circle.

• Third, it examines the strategic significance of Base Network and Circle’s Arc.

• Fourth, it reads Coinbase’s strategic horizon through the trajectory of Brian Armstrong, Coinbase’s CEO.

• Fifth, it looks at the Korean case to assess the reproducibility of the power structure across stablecoin issuance, distribution, and usage, before summarizing scenario-based conclusions and the relative beneficiary structure.

2. Current Regulatory Landscape and Its Impact on These Companies

2.1 The GENIUS Act: Fixing Stablecoins as a “Rules-Based Payment Instrument”

The core of the GENIUS Act is that it defines stablecoins not as mere private tokens, but as a separate federally recognized product category called payment stablecoins. The law brings together issuer qualifications, 1:1 reserves, permitted reserve asset scope, monthly disclosures, accounting verification, CEO/CFO certifications, and a prohibition on interest or yield merely for holding the asset into a single framework. This is a move that redefines the stablecoin industry not as a loose technological experiment, but as rules-based financial infrastructure.

The first effect of this law is the creation of an issuer bottleneck. Under the GENIUS Act, only qualified payment stablecoin issuers may issue payment stablecoins. In that structure, issuer status itself becomes an industry entry barrier. Issuance is no longer the private creation of a token that anyone can do, but a permissioned activity available only to firms that can support reserves and verification systems. This becomes a structural advantage for issuers like Circle, while strengthening issuer dependence for companies like Coinbase that are not issuers.

The second effect is the elevation of reserve asset management capability. The GENIUS Act limits reserve assets to cash, deposits, short-term Treasuries, RP/RRP, government money market funds, and similar instruments. This means reserve management is no longer simple safekeeping, but an activity that requires financial-infrastructure-level risk control and disclosure capability. The central competitive strength of the stablecoin business therefore shifts from “how fast can you attract users” to “how reliably can you manage reserves and prove that within a supervisory system.” This point connects directly to Circle’s business model, because Circle’s core earnings come precisely from reserve asset management.

The third effect lies in the direction created by the prohibition on interest and yield. The law bans interest or yield connected solely to holding, using, or maintaining the stablecoin. In practice, this means rewards received merely for holding the asset are to be blocked. This is a move to align stablecoins not as yield-bearing deposit substitutes, but as payment and settlement instruments. As a result, the basis of competition in the industry also changes. The key question becomes not who can offer higher holding rewards, but who can provide the more trusted payment instrument and distribution network.

The fourth effect is the restriction on DASPs, or digital asset service providers. The law establishes a structure under which, after three years, a DASP is generally prevented from offering or selling to U.S. customers any stablecoin not issued by a permitted payment stablecoin issuer. This increases the likelihood that stablecoin distribution in the U.S. becomes increasingly centered on permissioned assets over time. As a result, issuer premium rises, while distributors must redesign their strategies around permissioned assets. This structure has the force to reconfigure the market around issuers.

2.2 Latest Post-GENIUS Implementation: The Direction Is Already Set, and the Details Are Moving Into Rulemaking

As of March 2026, the GENIUS Act has moved beyond the legislative stage and into actual implementation. In September 2025, the U.S. Treasury issued an ANPRM asking for input on questions such as:

• who should qualify as a “permitted stablecoin issuer,”

• how far digital asset businesses such as exchanges and platforms should be included,

• whether foreign-issued stablecoins should be recognized if they meet standards similar to those in the U.S.,

• how strictly sanctions and AML rules should be applied,

• and whether state-level regulations are sufficiently comparable to federal standards.

In plain terms, the broad direction has already been set by statute, and the process has now moved into determining how strict the detailed standards will be.

In March 2026, the OCC released a proposed rule for GENIUS implementation. The document further specified permitted activities, reserve and redemption standards, supervisory authority, and application procedures. The FDIC, after proposing section 5 application procedures in December 2025, also announced in February 2026 that it would extend the comment period and introduce additional prudential requirements. In other words, supervisory agencies have started designing the actual operating rules.

This is where the law begins to function as a system. The key question is who can turn this regulation from a cost into an entry barrier and competitive advantage. Circle may be relatively well positioned in this structure because it has long publicly emphasized a regulation-first posture. Coinbase, by contrast, is not an issuer, and therefore stands not as a direct operator of this law, but as a company that must redesign its distribution and service strategy on top of the framework it creates.

2.3 The CLARITY Act: A Law Intended to Create a Formal Route for Trading, Brokerage, and Custody

Unlike GENIUS, the CLARITY Act is intended to organize the broader framework for which assets fall under which regulators in the digital asset market, and how exchanges, brokers, and custodians can legally operate through formal procedures. Put differently, it is a law intended to define which assets can be handled under which licenses, and what structure trading and custody can take within the formal system. The key elements of the bill include the following:

• the definition of digital commodities, or which coins can be viewed as having commodity characteristics,

• joint rulemaking by the SEC and the CFTC,

• permission for digital assets and permitted stablecoins to be traded not only on formal exchanges, but also on authorized alternative trading systems such as ATSs,

• the creation of registration pathways for brokers, dealers, exchanges, and custodians to legally operate,

• carve-outs for certain DeFi activities, meaning not all DeFi activity would necessarily be regulated,

• and covered securities-related provisions, under which certain qualifying digital assets may no longer need separate registration in each individual state.

The significance of CLARITY is not simply that it is pro-crypto. More precisely, it is about moving uncertainty into the realm of predictability. A company like Coinbase has long been exposed to a structure where what is allowed and what is prohibited is contested after the fact. If CLARITY opens a clearer path, then it becomes easier to understand which products and services can be offered through which channels. That alone becomes a condition for a reevaluation of valuation multiples. If permissioned stablecoins and digital commodities can enter formal trading systems, then tokenized assets, hybrid trading, and institutional-grade digital markets can become real.

This connects directly to the realization of what Coinbase refers to as the Everything Exchange. In that sense, CLARITY could be a highly direct tailwind for Coinbase’s business expansion.

Even here, however, the benefit operates on the condition that trading infrastructure actually opens up. That is different in character from directly owning the key bottleneck of the stablecoin value chain. That leaves Coinbase exposed to procedural uncertainty, drafting volatility, passage risk, and amendment risk all at once.

On January 9, 2026, the Senate Banking Committee announced January 15 as the formal review date for digital asset market structure legislation. But on January 14, that date was postponed on the grounds that bipartisan negotiations were continuing. These two events reveal two things at once. First, the legislative discussion had risen to the level of an actual political timetable. Second, the final language remained unstable. In other words, the probability of passage increased, but amendment risk rose as well.

Reporting at the time identified tokenized equities, DeFi treatment, the CFTC’s role, and stablecoin rewards as major points of contention.

Brian Armstrong responded publicly by saying that Coinbase could not support the bill in its current form, adding, “We’d rather have no bill than a bad bill.” This signals that what matters more than regulatory clarity in the abstract is clarity that does not work against Coinbase’s earnings structure. Therefore, the most important issue in CLARITY negotiations is not the broad direction, but the allocation questions embedded in specific provisions such as rewards, tokenized assets, and state authority.

Opposition from state regulators is still ongoing. In January and February 2026, NASAA raised concerns in letters about the CLARITY and DCIA framework, specifically around covered securities, tokenized instruments, state antifraud enforcement, and the preservation of cooperative federalism.

State regulators are effectively arguing that while it is good for the federal government to organize digital asset rules, it should not go so far as to strip away too much state authority in the process. The stronger the push toward a single federal regime, the more favorable it becomes for large players. But in the Senate, concerns about the erosion of state authority can reappear in the form of demanded revisions. Coinbase is especially sensitive to these language changes because covered securities, ATS treatment, and broker-dealer-exchange registration routes matter directly to it. Circle may be somewhat less directly affected, but it is not immune, because the trading and distribution path of permissioned stablecoins is also connected to market structure. Therefore, the adjustment of state authority is not a side issue, but a key variable that could change the final shape of CLARITY.

3. The Business Positioning and Financial Performance of Coinbase and Circle

3.1 Not the Same Kind of Crypto Company, but Two Different Earnings Formulas

The difference between Coinbase and Circle begins with their earnings formulas.

Coinbase is a company that must be evaluated through trading volume, price volatility, product mix, user activity, regulatory pathways, and interest rates all at once. Circle is a company that must be evaluated through interest rates, USDC circulation, and distribution costs, meaning the partner allocation costs required to grow USDC. This is not a mere accounting distinction. It determines how regulatory benefit accrues.

CLARITY reduces Coinbase’s discount rate by organizing the trading market structure, while GENIUS creates an issuer bottleneck and raises Circle’s institutional standing. Coinbase is a company that can place more products and services on top of its platform when regulation opens up. Circle is a company whose core engine becomes stronger the more regulation defines stablecoins as permissioned payment instruments. From the perspective of how directly regulatory change connects to earnings, Circle has the shorter path.

3.2 Coinbase 2025 Results: Still a Transaction Revenue Company, but Now Deeply Linked to USDC Rates as Well

Coinbase’s 2025 10-K shows that the company is no longer limited to the exchange business.

• annual trading volume: $1.221 trillion

• assets on platform: $376 billion

• monthly transacting users: 9.2 million

• net revenue: $6.883 billion

• transaction revenue: $4.055 billion

• subscription and services revenue: $2.828 billion

Of Coinbase’s $6.883 billion in net revenue in 2025, transaction revenue accounted for $4.055 billion, or about 59%. Stablecoin revenue also grew to $1.349 billion, but the company discloses that its total revenue remains significantly dependent on crypto asset prices and platform trading volumes. It also disclosed that a 150 basis point move in interest rates could impact stablecoin revenue by as much as approximately $540.3 million.

This shows that while transaction revenue still exerts a high degree of influence, the notable point is that Coinbase is now deeply exposed not only to trading volume, but also to interest rates and stablecoin adoption. Coinbase is therefore both an exchange and a player in the USDC economy. That illustrates the company’s complexity. Its total assets were about $29.67 billion, with cash and cash equivalents, customer custodial funds, crypto investment assets, goodwill, and intangible assets all accounting for meaningful portions.

This is not a simple exchange. It is a structure that includes M&A, platform expansion, institutional services, and custody. For investors, that means both upside and burden. A broad business footprint means larger upside if the Everything Exchange becomes real, but it also means broader exposure to regulatory and macro variables.

3.3 Circle 2025 Results: Even More Clearly a Circulation × Rates Company

Circle’s full-year 2025 results more directly reveal the core of its business.

• The company reported $2.747 billion in total revenue and reserve income in 2025, with reserve income accounting for 96% of the total.

• USDC in circulation at year-end was $75.266 billion, and average circulation during the year was $64.870 billion. These figures make clear that Circle’s core formula is circulation × reserve yield.

• There was a net loss, but the company explained the impact of IPO-related stock compensation, and adjusted EBITDA was $582 million.

What matters more to investors than a single line of net income is how clear the reserve-income-centered structure is. And the answer is clear. Circle’s earnings are much more directly connected to interest rates and stablecoin circulation than to broader market conditions.

Circle’s earnings formula moves simply as a function of circulation × interest rates. If CLARITY legalizes trading infrastructure and GENIUS elevates stablecoin credibility to an institutional level, the probability rises that stablecoins become the base unit of institutional payments and settlement. In that case, the most direct beneficiary is, of course, the issuer.

That said, falling interest rates are a direct hit to Circle. But Coinbase has also increased its stablecoin revenue mix and has disclosed interest rate sensitivity. Rate risk is now a shared variable for both companies. In that context, the company with more direct leverage to rising circulation is Circle.

In the balance sheet, segregated cash and cash equivalents held for the benefit of stablecoin holders make up most of the asset structure, which shows that reserve management itself is the core of the business model. This is structurally different from a typical platform business. Circle is more sensitive than a general platform company to declining interest rates, slowing circulation growth, sticky distribution costs, and the emergence of competing stablecoin issuers, rather than to user metrics.

3.4 USDC Economy Distribution: The Core Link Connecting the Two Companies

Coinbase and Circle are core partners that share the same USDC economy. Circle generates revenue through stablecoin issuance and reserve management, while Coinbase captures an economic share through USDC distribution, user touchpoints, and stablecoin revenue. The two companies therefore need to be analyzed separately, but the revenue distribution structure of the USDC economy must also be understood together.

The first thing that needs to be corrected is the oversimplified claim often repeated in the market that “Coinbase takes 50% of USDC-related profits.” According to Circle’s S-1, the Collaboration Agreement is not that simple.

• First, a payment base is calculated after subtracting external management and custody fees and certain other deductions from reserve-generated income.

• Then Circle takes an issuer retention amount first, reflecting the issuer role and related costs.

• After that, Circle and Coinbase each receive a party product economics share based on the proportion of USDC holdings on their respective platforms.

• And even after that, Coinbase receives 50% of certain remaining ecosystem economics from the payment base.

In other words, Coinbase’s economic share is not “50% of total USDC profits,” but a more complex structure calculated after multiple steps. Circle also recognizes the amount paid to Coinbase as distribution-related costs for accounting purposes.

This structure creates real synergy. If Circle grows and USDC issuance and circulation increase, the revenue Coinbase receives also rises. Conversely, if Coinbase grows and the amount of USDC held and circulated on its platform rises, Circle’s reserve base and reserve income also grow. And that increased reserve income is then shared with Coinbase again under the contract. In other words, the USDC economy itself is something the two companies are building together. In that sense, their relationship is closer to mutual amplification than pure competition.

The actual trend supports that interpretation. Circle’s S-1 states that on a 2024 daily weighted average basis, about 2% of USDC was held by Circle, about 18% by Coinbase, and about 80% by other third-party platforms. External analyses based on those disclosures also estimate Coinbase’s platform share of USDC holdings to have risen from around 5% in 2022 to 12% in 2023 and about 20% in 2024.

Looking only at the actual trend of the past few years, Coinbase’s influence within the USDC economy has been increasing. At the current stage, it cannot simply be assumed that as Circle grows, its Coinbase dependence automatically weakens. On the contrary, in the short term, Coinbase remains the strongest distribution and holding partner and occupies an even more important position.

That does not mean Circle’s upside is therefore more limited than Coinbase’s. The more important point is the directness of issuer premium after institutionalization. Today, the share of USDC held on Coinbase’s platform is a very important variable. But over the long term, Circle has the ability, based on its premium as a compliant issuer, to onboard more exchanges, fintechs, payment partners, institutional settlement channels, and FX networks. That means value can accumulate across a broader and more distributed set of channels. In other words, dependence on any one partner can be relatively diluted. Coinbase may be the largest USDC distribution partner today, but the current revenue-sharing structure may not be the final fixed end state in the long run.

3.5 Current Market Capitalization and Premium Relative to Financial Results

As of March 16, 2026, Coinbase (NASDAQ: COIN) had a market capitalization of $52.72 billion, while Circle (NYSE: CRCL) had a market capitalization of $30.63 billion. In absolute size, Coinbase is valued more highly. But rather than looking at the simple gap in market cap, it is more appropriate to compare how many multiples each company is trading at relative to its financial results.

Coinbase’s 2025 annual results were $6.883 billion in net revenue, $1.260 billion in net income, and $2.808 billion in adjusted EBITDA. On a simple basis, that implies Coinbase is trading at roughly:

• 7.7x revenue

• 41.8x net income

• 18.8x adjusted EBITDA

This suggests the market is valuing Coinbase not as a simple exchange, but as a platform company that includes trading, brokerage, custody, onchain infrastructure, and the Everything Exchange.

Circle’s 2025 annual results were $2.747 billion in total revenue and reserve income, a continuing operations net loss of $70 million, and adjusted EBITDA of $582 million. On that basis, Circle is trading at roughly:

• 11.1x revenue

• 52.6x adjusted EBITDA

Because Circle recorded a continuing operations loss in 2025 rather than positive net income, a P/E multiple is not meaningfully calculable. Accordingly, it makes more sense to evaluate Circle on reserve income structure and adjusted earnings, rather than on net income.

What this comparison shows is that in accounting-based valuation terms, Coinbase is indeed the stronger-quality company today. Coinbase trades at lower multiples relative to revenue and adjusted earnings and is valued as a platform company with clearly visible profitability. Circle, by contrast, is weaker on accounting profit but is being awarded higher expectations in terms of revenue and adjusted earnings multiples.

The market therefore appears to assign Coinbase a more stable platform premium, while assigning Circle a stronger expectation premium tied to stablecoin institutionalization. But from a business outlook perspective, Coinbase may already be a company whose platform profitability and diversification are largely visible, while Circle is still a company whose stronger earnings linkage to stablecoin institutionalization is being more heavily anticipated. That is precisely why the comparison remains worth making.

3.6 Scenario Comparison Based on Circle’s Guidance

Circle is a relatively narrow business, and its revenue structure is very clear. That can look like a weakness, but from an investor’s point of view it can actually be a strength. Unlike an exchange platform, where one must analyze trading volume, prices, user activity, product mix, and changes in legislative wording all at once, Circle’s core earnings formula is comparatively transparent. Interest rates remain hard to predict, but based on circulation, current margins, and cost structure, it is possible to estimate with some approximation how much earnings power the company could reach if its own guidance materializes. That is why Circle itself emphasizes RLDC, RLDC margin, and USDC circulation growth as key metrics.

Let us first look at the 2025 numbers.

Circle reported total revenue and reserve income of $2.747 billion in 2025.

Of that, reserve income accounted for 96%.

Total distribution, transaction, and other costs for the same year were $1.664 billion.

As a result, RLDC came to $1.083 billion, with an RLDC margin of about 39.4%.

RLDC is the amount left after subtracting distribution, transaction, and other costs from total revenue and reserve income. Put simply, it is close to the core earnings power remaining from the USDC economy after partner distribution costs are reflected. It is not the same as net income, but RLDC is arguably the clearest measure of how economically strong Circle’s core business really is.

These figures matter because Circle’s core operating strength has already reached substantial scale. Coinbase’s net income in 2025 was $1.260 billion. Of course, RLDC and net income are different concepts, so a direct comparison has limits. Coinbase’s net income reflects all operating costs, stock-based compensation, taxes, and non-operating items, whereas Circle’s RLDC is a pre-net-income measure of core profitability. Even so, the implication is clear. The core earnings power of Circle’s business is already approaching Coinbase’s annual net income in scale. In other words, the economics of stablecoin issuance and reserve management are operating at a far larger number than the market may fully appreciate.

From here, Circle’s own guidance can be expanded into scenarios.

The company has guided for approximately 40% annualized growth in USDC circulation over the mid-to-long term.

It has also guided for an RLDC margin target of 38% to 40%.

If this is applied simply to the 2025 average circulation of $64.87 billion, the next-stage average circulation would rise to roughly $90.86 billion.

If reserve yield does not collapse sharply, and if the cost structure, including distribution-related costs, remains broadly similar to that of 2025, then total revenue and reserve income could expand to about $3.85 billion, while RLDC could rise to around $1.5 billion.

That would imply core operating earnings power above Coinbase’s 2025 net income of $1.260 billion.

Circle’s strength, then, is not just the abstract idea that “it is attractive because it is the issuer,” but that once circulation passes a certain threshold, earnings power can accelerate sharply.

Even under a more conservative view, the implication does not really change. Circle’s core earnings formula is ultimately circulation × reserve yield × distribution structure. The hardest variable to forecast is interest rates. But even setting rates aside, when one considers the company’s guided USDC circulation growth alongside its current RLDC margin range, it is still relatively clear that the structure is one where core earnings power strengthens quickly as circulation increases. Compared with Coinbase, where one must simultaneously assess trading volume, prices, market sentiment, tokenized assets, and the final CLARITY language, Circle is far more legible through a simple numerical structure.

That does not mean Circle is always better than Coinbase. The counterarguments are also clear. First, Coinbase may have greater explosive upside in a strong bull market. If exchange activity, onchain fees, Base, tokenized assets, and the Everything Exchange are all re-rated together, Coinbase’s absolute upside may be larger.

Second, Circle shares the economics of the USDC ecosystem with Coinbase. An increase in circulation does not mean all of that incremental value remains with Circle shareholders.

Third, declining interest rates are a more direct burden for Circle. Coinbase is also exposed to rates through stablecoin revenue, but Circle’s core earnings formula is more directly tied to circulation and reserve yield.

Accordingly, in an environment defined by a strong bull market, a surge in trading volume, expansion in tokenized assets, and platform multiple rerating, Coinbase may be more favorable. But in an environment where issuer structure strengthens, USDC circulation expands, and payment and settlement infrastructure adoption becomes the center of gravity, Circle may be more favorable.

4. Base Network and Arc Network

4.1 Networks Targeting Different Markets

Both Base and Arc are open blockchain networks, but they differ in design purpose and in the markets they are targeting. That means it is more accurate to distinguish the growth criteria and actual competitors of each network than to compare them in a simple “which chain is stronger” framework.

Introducing Base

Base is first and foremost a network for the onchain expansion of the Coinbase ecosystem. The Coinbase Sequencer receives, records, and reports transactions on Base, and in the early stage it operates as the sole sequencer. That is advantageous for fast operations and user experience optimization, but it also means trust in network operations remains more concentrated around Coinbase.

Base later announced the achievement of Stage 1 decentralization and the introduction of fault proofs in order to reduce this concentration risk. Taken together, it is more appropriate to understand Base not as a payments-specialized chain, but as a scalable Layer 2 network designed to grow a broader onchain ecosystem including apps, assets, and trading. Base’s current position supports that interpretation. As of March 2026, Base had approximately $11.46 billion in total value onchain and ranked among the leading chains in activity. In other words, Base is already establishing itself as a chain where people and applications are actually moving.

Arc | The Economic OS | Stablecoin-native L1 blockchain

Arc, by contrast, is a Layer 1 network for stablecoin finance. Circle presents Arc around several core elements: predictable dollar-denominated fees, sub-second transaction finality, optional privacy compatible with regulation, and direct connection to Circle’s broader financial infrastructure. Arc is a chain designed from the outset with payments, settlement, FX, and institutional financial applications in mind. It is less a general-purpose chain than a purpose-built financial infrastructure chain. That is the starting point for understanding the difference between Base and Arc. If Base is a chain designed to absorb more apps and user activity, Arc is a chain designed to move more important financial flows onchain.

4.2 Base’s Key Growth Metrics: User Activity, Capital Inflows, and the App Ecosystem

That difference leads directly to different views on which metrics matter most.

Because Base is an ecosystem-expansion network, its health and growth should be evaluated through metrics such as:

• total value locked or total value onchain,

• real user activity,

• active addresses,

• repeat user ratio,

• number of core applications,

• transaction fee levels,

• and the pace of developer inflow.

The central question for Base is how many assets and how much activity are coming onto the network.

For a network like Base that is aiming for a broad application ecosystem, it is not enough to judge on TVL alone. Real transaction volume, app diversity, user retention, and fee competitiveness all matter together. Two chains can have the same TVL but very different quality if one has users returning frequently, balanced app growth, low fees, and active transaction flow.

4.3 Arc’s Key Growth Metrics: Payment Volume, Settlement Volume, Velocity, and Institutional Adoption

Arc is different. If Arc is viewed through the same lens as Base, centered on TVL or active wallets, the essence can be missed. Because Arc is a chain specialized for stablecoin finance, what matters far more than how much capital is sitting onchain is how often that capital is actually used in real payments and settlement.

The more important metrics for evaluating Arc are therefore:

• stablecoin payment volume,

• total settlement volume,

• FX transaction volume,

• stablecoin velocity onchain,

• number of institutional partners,

• actual case studies of financial institution adoption,

• transaction finality speed,

• and auditable transaction structure.

Base should be judged by how many people are using it, while Arc should be judged by how much important money flow is moving onto it. Velocity is especially important for Arc because it refers not to static balance size, but to how often stablecoins on the chain are actually circulating through payment, settlement, and FX flows. In that sense, Arc should be judged much more by payment network intensity than by TVL.

4.4 Base and Arc Are More Likely to Combine in a Synergistic Structure

Viewed this way, Base and Arc are more likely to combine as networks operating at different layers than to compete directly. Base is a network well suited for Coinbase to expand onchain user activity and the application ecosystem. Arc is a network well suited for Circle to connect stablecoins more deeply into institutional payment and settlement flows.

Base is stronger on the consumer, developer, DeFi, and application ecosystem side, while Arc is stronger on payment, settlement, and institutional financial infrastructure. Because the purposes of the two networks differ, they are more likely over the long term to become complementary within the broader USDC economy than to collide head-on for the same users. If Coinbase grows distribution, trading, and user touchpoints while Circle grows issuance, settlement, and financial infrastructure, then Base and Arc can also operate at different layers in a way that reflects those business structures. In that sense, it is more accurate to understand Base and Arc as networks serving different functions rather than placing them in a simple competitive frame.

4.5 Base’s Real Competitors: General-Purpose Ecosystem L2s and Exchange/Capital-Backed Chains

So who are Base’s real external competitors? Base should be separated from Arc at this point. Its most direct competitors are other ecosystem-expansion Layer 2 networks in the same category.

Specifically, Arbitrum, OP Mainnet, Ink, and Unichain are more appropriate direct comparisons. These networks all compete on application ecosystem, user activity, developer inflow, DeFi liquidity, and transaction cost competitiveness. Ink in particular, as Kraken’s OP Stack-based L2, is especially similar to Base as an exchange-built ecosystem-expansion chain. Base’s competition is ultimately about who can attract more users, more applications, and more onchain transaction activity.

Beyond that, BNB Chain and Mantle can also be viewed as practical competitors in a broader sense. Strictly speaking, they are not in the exact same Layer 2 category as Base, but they do compete for the same user capital and the same onchain activity, which makes them relevant comparison points.

BNB Chain has strong exchange-driven distribution power and a large retail user base that drive onchain trading and asset movement. Mantle’s strengths lie in its capital base, treasury size, DeFi asset attraction, and onchain financial narrative. In other words, even where the technical structures are not identical, BNB Chain and Mantle still compete for the same users, liquidity, and application ecosystems that Base is trying to attract. So Base’s external competitors are, narrowly, Arbitrum, OP Mainnet, Ink, and Unichain, and more broadly, exchange- and capital-backed chains such as BNB Chain and Mantle.

Even among those competitors, however, Kraken’s Ink is probably the most appropriate direct comparison.

4.6 Arc’s Real Competitors: Stablecoin Payment and Settlement-Specialized Networks

Arc’s real competitors are different. Arc should be compared not with general-purpose chains, but with networks whose core product is stablecoin payment and settlement.

On that basis, Stable Network and Plasma Network are more appropriate direct competitors for Arc. Stable describes itself as instant payment infrastructure based on USDT and emphasizes that it is a purpose-built network centered on fees and payment structure for stablecoins. Plasma likewise defines itself as stablecoin payment infrastructure, highlighting fast processing, low cost, institutional-grade security, and USDT-centric usability.

In other words, Stable and Plasma are not general-purpose chains built for broad user expansion. They are chains designed from the beginning for stablecoin payment and settlement, which makes them a much more accurate comparison axis for Arc.

One could also place general-purpose public chains like Tron in a broader competitive category given their large USDT usage, but fundamentally those remain general-purpose public chains. As such, they are less precise direct competitors for Arc.

4.7 Different Valuation Frameworks Must Ultimately Be Applied

From this perspective, the proper valuation metrics for Arc become clearer as well. If Arc is competing with networks such as Stable and Plasma, then it should not be evaluated based on TVL or simple active wallet count, but rather on stablecoin payment volume, settlement volume, velocity, FX processing scale, number of institutional adoptions, and the depth of integration with real financial infrastructure. Base, by contrast, should be judged through user activity, capital inflows, application ecosystem, transaction volume, and fee competitiveness.

Therefore, rather than grouping Base and Arc together as though they were the same kind of chain, it is much more accurate to analyze them separately according to the market each is targeting, the external competitors each faces, and the metrics appropriate to each. In summary, Base is an ecosystem-expansion chain that attracts applications, assets, and trading, while Arc is a financial infrastructure chain that connects stablecoin payment and settlement into institutional financial flows. The two are more likely to combine in a synergistic structure within the broader USDC economy over the long run. Their external competitors, however, are different. Base competes with general-purpose L2s and exchange- or capital-backed expansion chains, while Arc competes with stablecoin payment and settlement-specialized networks such as Stable Network and Plasma Network. This distinction is not just a matter of classification. It changes the core value metrics and the investment interpretation of each network.

5. Brian Armstrong’s Intent: How Far Does Coinbase Want to Go?

Brian Armstrong’s messaging has followed a remarkably consistent pattern. He has continually called for regulatory clarity, indicated that Coinbase could invest more outside the U.S. if necessary, expanded political influence through efforts such as Stand With Crypto, and ultimately withdrew support publicly when the Senate market structure draft appeared unfavorable. This means Coinbase is not a company trying to avoid regulation, but one seeking regulatory clarity in a form favorable to its own strategy.

• January 2023: internal messaging framed regulatory clarity as a long-term opportunity, maintaining long-term strategy even during the market downturn.

• April 2023: comments suggested that if regulatory uncertainty persisted, Coinbase might invest more in overseas markets (“…we may have to consider investing more in other regions…”).

• April 2023: during the SEC Wells Notice episode, he publicly argued that Wells Notices are not constructive when there is no clear rulebook (“…when there’s not a clear rulebook…”).

• June 2024: Stand With Crypto, supported by Coinbase, grew rapidly, and Armstrong emphasized the expanding political influence of crypto users.

• January 2026: when issues such as stablecoin interest and rewards restrictions emerged in the Senate draft market structure bill, Coinbase publicly declared that it could not support the current form, leading to the postponement of Senate Banking Committee discussion.

• February 2026: Coinbase’s 10-K described its core 2026 vision as pursuing the Everything Exchange while simultaneously scaling USDC adoption (“…drive crypto’s role… through the Everything Exchange and by advancing stablecoin adoption…”).

As Coinbase’s 2025 10-K makes clear, the company’s central slogan is encapsulated in the phrases “Everything Exchange” and “advancing stablecoin adoption with USDC.” Coinbase has no intention of remaining merely a spot crypto exchange. It is trying to place trading, brokerage, custody, tokenized assets, onchain services, and USDC utility on top of a single platform. Base is the infrastructure pillar of that strategy, and CLARITY is the key law that could make it institutionally possible.

The public opposition in January 2026 is especially important. Armstrong said the bill in its current form was not supportable, adding, “We’d rather have no bill than a bad bill.” This means that what matters more than regulatory clarity in the abstract is clarity that does not damage Coinbase’s earnings structure. It also shows that specific provisions around stablecoin rewards, tokenized equities, and the role of the CFTC directly affect Coinbase’s interests. For investors, Armstrong’s statements become a kind of risk proxy. As CLARITY gets closer, Coinbase’s lobbying and political engagement may intensify, and with that the volatility of the bill’s final language may rise as well. But that is also one of Coinbase’s greatest strengths. The reason it reacts so sensitively is that if the bill is finalized in a way that favors Coinbase, the scope of expansion could be very large.

If everything unfolds according to the scenario Brian Armstrong is pursuing, spanning exchange, brokerage, custody, onchain services, USDC, Base, and the Everything Exchange, then the upside itself could ultimately be greater than Circle’s.

6. A Korean Coinbase-Circle Model? (Dunamu-Naver)

In Korea, won stablecoins are closely tied to monetary policy, financial stability, and payment infrastructure. As a result, key issues have emerged around the identity of the issuer, whether bank-centered or open to non-bank issuers, capital requirements, supervisory authority between the Bank of Korea and the Financial Services Commission, and whether interest should be permitted.

The U.S. Circle-Coinbase structure separates the issuer from the distributor or exchange. If won stablecoins become a reality in Korea, the central issue will likewise become who issues, who distributes, and who controls the places of use. This should not be read as a mere technical question, but as a restructuring of the power map.

At this stage of regulatory and legislative discussion, Dunamu (Upbit) appears to be moving beyond the exchange model and placing emphasis on infrastructure in the stablecoin era.

In this context, the recently announced GIWA is particularly interesting. The move to expand beyond the exchange into a chain and wallet suggests an attempt to capture distribution, settlement, and user touchpoints together. In U.S. terms, it is closer to a Coinbase + Base combination.

Naver affiliates, by contrast, are strong in payments and usage. Even if the issuer is ultimately determined to be a bank or consortium, the network of places where the stablecoin is actually distributed and spent becomes a separate source of power. In that case, the Circle-Coinbase-usage structure of the U.S. could be reproduced in Korea through a different combination.

Korea, however, differs from the U.S. in that policy risk is higher and the identity of the issuer has not yet been fully settled. But one thing is clear. If Korea also forms a structure in which the issuer is institutionally defined, then issuer premium will emerge, while distributors and usage networks will capture their own economic share on top of that. The Korean case should therefore also be read through the frame of an issuance-distribution-usage power structure. It should not be taken as a simple copy of the U.S. model, but as a clue for how that power map may reappear in Korea.

Conclusion

The core of this research is not to make a simple comparison of which company, Coinbase or Circle, is better. What matters more is identifying which company’s earnings structure is strengthened more directly as U.S. digital asset institutionalization advances, and which company is positioned closer to the center of that institutional change.

By that standard, both companies are clearly beneficiaries. Coinbase sits at the center of the order that the CLARITY Act is trying to define across trading, brokerage, custody, tokenized assets, and onchain platforms. Considering the structure that connects exchange, brokerage, custody, Base, and the Everything Exchange, the absolute size of the upside could be very large if market structure legislation is finalized in a way favorable to Coinbase. In particular, in an environment where a strong bull market, surging trading volume, expansion of tokenized assets, and platform multiple rerating all occur together, Coinbase is likely to show stronger elasticity.

But what the U.S. institutionalized first in this phase was not the expansion order of exchange platforms, but the order of permissioned stablecoin issuers. Through issuer qualifications, 1:1 reserves, disclosures and verification, interest prohibition, and distribution restrictions, the GENIUS Act first anchors the power structure of the stablecoin industry on issuers and reserve asset managers. And Circle is the company that entered that structure first. That is the single biggest divergence from Coinbase.

Coinbase is a company that can do more things once regulation is clarified. Circle is a company whose core business economics are directly strengthened as regulation is clarified. That difference is not small. Coinbase must simultaneously clear multiple variables such as trading volume, prices, rewards rules, the permitted scope of tokenized assets, and the final CLARITY language. Circle, by contrast, moves on a comparatively simple earnings formula built around circulation, reserve yield, and distribution costs. Coinbase is a company with more optionality, while Circle has a shorter path from policy change to earnings.

Of course, Circle does not monopolize the USDC economy. USDC is already an ecosystem strongly tied to Coinbase, and through the Collaboration Agreement Coinbase receives a large economic share of reserve income. Over the last several years, Coinbase’s influence within the USDC economy has not declined, but rather increased. So this research is not arguing for a simplistic issuer supremacy thesis that says Circle captures everything. Rather, the key question is who has the more direct institutional beta even within a structure where both grow together.

The answer to that question still leans toward Circle. As stablecoin institutionalization advances, barriers to entry for issuers are likely to rise further, and the premium for compliant issuers is likely to strengthen. Circle remains highly dependent on Coinbase today, but over the long term, as more exchanges, fintechs, payment partners, and institutional settlement channels are onboarded, dependence on any single partner can be relatively diluted. In that process, reserve income on growing circulation can accumulate more directly across a wider set of channels. In the end, Circle’s upside comes not simply from higher issuance volume, but from the combination of institutionalized issuer status and expanding reserve management scale.

For that reason, the final judgment of this piece is clear. Coinbase is one of the defining beneficiaries of the normalization of U.S. digital asset market structure. But Circle is the more direct and more pure beneficiary of stablecoin institutionalization. In periods defined by a strong bull market and explosive trading volume, Coinbase may be more favorable. But in the current phase, where GENIUS is already in force, CLARITY is still under negotiation, and issuer order is being defined first, it is more reasonable to view Circle rather than Coinbase as the company to which the core economic pool of policy change is more directly connected.

Legal & Disclosures

Disclaimer

This publication is for informational and research purposes only and does not constitute investment, financial, or legal advice, nor a recommendation to buy, sell, or hold any asset.

All analysis reflects publicly available information and reasonable assumptions at the time of writing and may change as market or regulatory conditions evolve.

This research was prepared independently and without compensation from any issuer or affiliated party. Readers are solely responsible for their own investment decisions. Exilist assumes no liability for any losses resulting from reliance on this publication.

Terms of Use

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When referencing or citing this publication, clear attribution to Exilist is required.

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Unauthorized commercial use, misrepresentation of analytical conclusions, or redistribution without proper attribution may result in legal action.

Aztec’s listing on Upbit’s KRW market is notable not simply as another token listing, but as a rare moment where a major Korean exchange explicitly embraced privacy infrastructure as a legitimate sector.

Following Upbit’s announcement on February 19, trading for AZTEC officially began on February 20 at 16:30 KST. Given Korea’s historically conservative stance toward privacy-focused assets, this move stands out. It also naturally invites comparison with Zama, another privacy-oriented project operating at the infrastructure layer.

But Zama sits at an uncomfortable intersection between ambitious cryptographic theory and practical, deployable infrastructure. Kyle Samani’s decision to step down from daily operations at Multicoin Capital while remaining on Zama’s board only intensified debate around its long-term prospects.

This article evaluates, from an operational perspective, whether Zama can realistically become lasting infrastructure, and where it stands today.

1. Why Aztec’s Upbit Listing Matters

Korean exchanges have historically been cautious with privacy-related assets. Regulatory risk (AML concerns), internal compliance standards (traceability), and limited retail appetite for infrastructure narratives all act as barriers.

Yet Upbit opened AZTEC simultaneously across KRW, BTC, and USDT markets. This implies at least two internal conclusions:

• Aztec was categorized not as an anonymous payment coin, but as a privacy Layer 2 on Ethereum.

• Exchanges increasingly recognize that institutional on-chain activity will inevitably require privacy primitives.

With privacy infrastructure now appearing on major exchange listing tables, the natural comparison becomes ZK-based systems (Aztec) versus FHE-based systems (Zama).

2. Zama and FHE: Breakthrough or Expensive Experiment?

In February 2026, crypto markets revealed a widening gap between technical sophistication and commercial validation.

Zama, widely regarded as a pioneer of Fully Homomorphic Encryption (FHE), launched its token on February 2. Despite private valuations exceeding $1B, its fully diluted valuation quickly settled around ~$200M in public markets.

This gap signals that what venture capital once framed as the “holy grail of cryptography” is now being priced as an expensive experiment: technically impressive, but still commercially unproven.

Samani’s pivot toward AI and robotics suggests Zama is increasingly positioned not as a Web3 project, but as future AI security infrastructure. At the same time, it highlights how difficult this asset remains for crypto-native markets to digest.

1) The Valuation Collapse

Trading at roughly $200M FDV after unicorn-level private rounds implies one of two things: either there is insufficient retail liquidity to absorb institutional exit supply, or the market is implicitly rejecting the feasibility of the technology.

Blockchain security depends on attack costs exceeding potential rewards. At this valuation, staking-based security budgets become questionable. If network takeover costs fall into the tens of millions, enterprises will hesitate to entrust sensitive data.

Zama’s burn-and-mint token model compounds this issue. Fees are burned, while validators receive newly minted tokens. Lower market caps directly translate into weaker economic security.

There is also a structural paradox. As FHE becomes more efficient, fewer tokens are required per computation, reducing token demand. At the same time, token price volatility makes enterprise cost forecasting difficult, pushing companies toward predictable cloud pricing models.

Add potential long-term VC sell pressure, and price recovery becomes even harder. In short: the technology may be elegant, but the economic container is fragile.

2) Is the Technology Actually Usable?

Even after major performance improvements, FHE remains orders of magnitude slower than plaintext computation. In absolute latency terms, operations that complete in seconds under normal conditions can take hours under FHE.

If the core promise of the AI agent era is real-time responsiveness and autonomous interaction, FHE fundamentally collides with that trajectory.

Proponents argue ASIC acceleration will eventually resolve this. However, developing custom silicon requires massive capital, multi-year timelines, and manufacturing priority that is highly unlikely at Zama’s current market scale. Major players like NVIDIA or TSMC have little incentive to allocate dedicated production lines for FHE-specific chips. Software optimization alone cannot overcome these physical constraints.

Meanwhile, market momentum favors solutions that are “secure enough and significantly faster.”

• TEE (Trusted Execution Environments): GPUs such as NVIDIA H100/B200 already support confidential computing with only ~1.1–1.5x overhead versus plaintext. Enterprises consistently prioritize speed and cost over fully trustless privacy.

• MPC (Multi-Party Computation): MPC has reached near-production maturity, and many teams already combine MPC with ZK proofs to solve privacy problems today.

Compared to FHE’s massive computational overhead, these approaches offer deployable security right now.

More critically, FHE struggles with composability. In agent-based systems where outputs from Agent A become inputs for Agent B, applying FHE across every step causes computational costs to grow exponentially.

Most users will not pay 100x more for privacy.

Taken together, this creates a real risk that Zama becomes the most technically complete solution in the market, and the one nobody actually uses.

3. Interpreting Kyle Samani’s Exit

Samani’s resignation carries far more meaning than a routine leadership change.

Shortly before stepping down, he published (and later deleted) tweets questioning the future of Web3 and dApps, reframing blockchains not as application platforms but merely as asset ledgers. He cited Solana and Zama as rare exceptions.

From his perspective, the true battleground is no longer Web3, but AI, robotics, and longevity technologies, where personal data security becomes existential. In that framing, FHE becomes a mathematical foundation for AI-era privacy, and Zama is repositioned not as a crypto project, but as future security infrastructure.

Still, this move can also be interpreted less charitably. Some view it as an attempt to preserve strategic flexibility around a heavily concentrated portfolio position. Multicoin has previously faced criticism for overexposure to single narratives, and Samani’s advocacy may reflect confirmation bias rather than dispassionate analysis.

It is also possible that his conviction in Zama stems more from technical aesthetics than commercial realism. He has historically favored ambitious engineering narratives centered on cryptographic elegance, even as several of those narratives collapsed in practice.

Whether FHE can escape that same fate remains an open question.

4. And Yet

In the 1990s, streaming video over dial-up sounded absurd. Today, real-time 4K streaming is trivial.

FHE sits in a similar place today.

Despite optimization efforts, throughput still hovers around the 20–30 TPS range, and latency remains extreme. In an AI agent economy defined by real-time responsiveness, this directly conflicts with system assumptions.

Judging FHE purely on today’s metrics would be equivalent to declaring the death of streaming based on 1990s modem speeds. Zama argues this gap can be closed via algorithmic breakthroughs and infrastructure evolution.

1) Zama’s Three-Stage Technical Roadmap

Phase 1: Software Optimization
Using TFHE-rs and Concrete, Zama reports 10–20x improvements in specific operations.

Phase 2: Hardware Acceleration
Zama targets FHE-specific ASIC development around 2027–2028. However, without preferential access to NVIDIA or TSMC, this remains a long-term aspiration rather than a near-term solution.

Phase 3: Hybrid Architecture (FHE + MPC + ZK)
Zama proposes FHE for computation, MPC for key management, and ZK for input validation, with fhEVM acting as a coprocessor to offload encrypted computation.

This is a pragmatic engineering approach rather than ideological purity.

2) Early Signals of Adoption

Zama is not operating purely at the white paper level.

OpenZeppelin is collaborating with Zama on ERC-7984, a confidential token standard that lowers developer friction through familiar abstractions.

In January 2026, Zama conducted a sealed-bid on-chain auction with over 11,000 participants and ~24,700 encrypted bids, structurally eliminating frontrunning and sandwich attacks.

While still experimental, this demonstrated that FHE can function in live environments.

Conclusion

Zama’s current market performance is undeniably weak. Prolonged suppression at these levels directly weakens network security budgets and erodes ecosystem confidence. Market skepticism is therefore rational.

Yet Zama also deserves credit for shipping real systems rather than relying solely on theoretical promises.

Among privacy technologies, FHE offers the strongest cryptographic guarantee: computation on encrypted data without exposing plaintext. TEE and MPC achieve practicality by accepting trust assumptions, whereas FHE minimizes them entirely.

TEE already integrates directly into modern AI infrastructure, which is why it will likely dominate near-term enterprise adoption. For FHE, the bottleneck is not cryptography but speed and resource cost.

If Zama can compress these constraints into an industrially acceptable range, FHE could eventually surpass TEE and MPC across high-sensitivity sectors such as medical data, financial models, and identity infrastructure. This matters because sensitive data industries ultimately demand structural security, not compromise-based security.

Another important signal emerged when Upbit listed Aztec across KRW, BTC, and USDT markets. For a Korean exchange historically cautious toward privacy assets, this suggests a shift: privacy is beginning to be treated as infrastructure rather than taboo.

In summary, Zama’s present reality is harsh, but the technical logic of FHE remains intact. The real question is not whether the cryptography works, but whether the engineering can deliver performance at industrial scale.

The decisive factor is not the direction of the technology.

It is execution.

The future of FHE will be determined not by cryptography papers, but by engineering discipline.

Legal & Disclosures

Disclaimer

This publication is for informational and research purposes only and does not constitute investment, financial, or legal advice, nor a recommendation to buy, sell, or hold any asset.

All analysis reflects publicly available information and reasonable assumptions at the time of writing and may change as market or regulatory conditions evolve.

This research was prepared independently and without compensation from any issuer or affiliated party. Readers are solely responsible for their own investment decisions. Exilist assumes no liability for any losses resulting from reliance on this publication.

Terms of Use

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When referencing or citing this publication, clear attribution to Exilist is required.

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Stablecoins were once viewed as simple liquidity tools for crypto markets.
Circle’s latest earnings suggest they may be evolving into foundational infrastructure for the digital financial system.

TL;DR

• Circle Internet Group reported $770M in 4Q25 revenue (+77% YoY) and $2.75B annual revenue (+64% YoY).

• USDC supply grew 72% YoY, reaching $75.3B by the end of 2025.

• Adjusted EBITDA margin reached 54%, demonstrating the strong operating leverage of the stablecoin model.

• Potential U.S. legislation such as the Clarity Act and GENIUS Act could strengthen Circle’s regulatory positioning.

• While Tether still dominates market share, USDC is rapidly gaining ground in on-chain economic activity.

Why Circle’s Earnings Matter

Stablecoins have long been viewed primarily as liquidity tools within crypto trading markets.

Circle’s latest earnings, however, suggest something more significant: stablecoins may be evolving into foundational infrastructure for the digital financial system.

The scale of Circle’s growth, combined with increasing regulatory clarity in the United States, is prompting investors to reconsider the role of stablecoin issuers in the global financial landscape.

Rather than simply issuing digital dollars, companies like Circle are increasingly positioning themselves as infrastructure providers for internet-native finance.

1. 4Q25 Financial Performance: Operating Leverage at Scale

On February 25, 2026, Circle Internet Group (NYSE: CRCL) released its fourth-quarter and full-year 2025 financial results.

The report revealed that all major financial metrics exceeded company guidance, highlighting the scalability of the stablecoin issuance model.

Key Metrics

• 4Q25 Total Revenue and Reserve Income: $770M (+77% YoY)

• FY2025 Revenue: $2.75B (+64% YoY)

• USDC Circulation: $75.3B (+72% YoY)

• Adjusted EBITDA Margin: 54%

The rapid expansion of USDC supply was the primary driver of revenue growth.

By the end of 2025, circulating USDC reached $75.3B, nearly doubling the company’s original growth target.

More importantly, profitability improved dramatically. Adjusted EBITDA increased more than fourfold year-over-year, indicating that Circle has entered a phase where incremental increases in USDC supply translate into disproportionately higher profits.

2. Revenue Diversification: Moving Beyond Interest Income

Historically, Circle’s revenue has been largely dependent on interest income generated from the reserve assets backing USDC.

However, the company is increasingly expanding its revenue streams through infrastructure and service-based activities.

In 4Q25, Other Revenue reached $37M, compared with just $2.4M in the same quarter the previous year.

This category includes:

• Blockchain network partnership revenue ($24.7M)

• Validator rewards from operating a Super Validator on Canton Network ($12.2M)

These new revenue streams suggest that Circle is gradually evolving beyond stablecoin issuance toward becoming a participant in blockchain infrastructure itself.

Another important development is the increasing share of USDC hosted directly within Circle’s own platform.

As of 4Q25, approximately 17% of total USDC supply ($12.5B) is now hosted internally, reducing distribution costs paid to external partners.

As a result, Circle’s Revenue Less Distribution Costs (RLDC) margin increased to 40.1%.

3. Drivers Behind the Recent Stock Re-Rating

Circle’s recent stock rally reflects more than just strong earnings performance.

Investors appear to be reassessing the company’s long-term strategic role within the global financial system.

Institutional Adoption

Large financial institutions and payment networks are increasingly experimenting with stablecoin settlement systems.

For example, Visa has implemented infrastructure that allows U.S. issuers and acquirers to settle transactions using USDC 24 hours a day, seven days a week.

Circle has also partnered with Intuit, further demonstrating the potential role of stablecoins in real-world commercial payments.

These developments suggest that USDC is gradually evolving beyond a trading instrument into a functional settlement asset for digital commerce.

Expansion of Circle’s Infrastructure

Circle is also developing additional infrastructure around USDC.

The company’s Arc platform enables institutions to build tokenized financial applications on a dedicated blockchain infrastructure. Currently, more than 100 institutions are participating in the Arc testnet.

Meanwhile, the Circle Payments Network (CPN) includes 55 financial institutions, with the capacity to process roughly $5.7B in annual transaction volume.

More broadly, these initiatives reflect Circle’s ambition to position USDC not just as a digital dollar, but as the settlement layer for internet-native finance.

Together, these initiatives position Circle as a potential settlement infrastructure provider, rather than merely a stablecoin issuer.

4. Regulatory Catalysts: The Strategic Importance of the Clarity Act

Recent regulatory developments in the United States could significantly reshape the stablecoin market.

Following the passage of the GENIUS Act in July 2025, policymakers are now debating the Clarity Act, which aims to clarify the regulatory classification of digital assets.

If enacted, the legislation could provide several strategic advantages for Circle.

Potential Implications

Legal classification

Stablecoins would likely be treated as payment instruments or commodities, rather than securities.

Bank adoption

The law could provide a pathway for banks regulated by the Federal Reserve and the Office of the Comptroller of the Currency to use stablecoins as settlement assets.

Federal Reserve master account access

Although not guaranteed, regulatory clarity could eventually allow compliant issuers to gain direct access to Federal Reserve master accounts, reducing reliance on commercial banking intermediaries.

Cash-equivalent accounting status

The legislation may also allow compliant stablecoins to be treated as cash equivalents on corporate balance sheets, potentially unlocking significant institutional demand.

5. USDC vs USDT: Transparency vs Liquidity

The global stablecoin market is effectively dominated by two major issuers:

• Circle Internet Group — USDC

• Tether — USDT

Tether still maintains more than 72% market share, making it the dominant player in the space.

However, the two assets operate under very different strategic models.

Tether’s Strategy

Tether reported over $10B in net profit in 2025, driven in part by a more aggressive reserve allocation strategy that includes:

• Bitcoin holdings

• Gold reserves

• Venture investments

Circle’s Strategy

Circle follows a much more conservative approach, investing 100% of USDC reserves in cash and short-term U.S. Treasuries.

While this may generate lower returns during bullish cycles, it strengthens Circle’s position in terms of transparency, regulatory compliance, and redemption stability.

On-Chain Activity

Interestingly, although USDT still dominates market capitalization, transaction data suggests that USDC is rapidly gaining ground in real economic activity.

As of 4Q25, USDC accounted for roughly 47% of total stablecoin transaction volume, reflecting strong adoption across DeFi, payments, and on-chain financial infrastructure.

Key Takeaways

• Circle’s earnings highlight the operating leverage embedded in the stablecoin issuance model.

• Regulatory developments such as the Clarity Act could significantly strengthen the competitive position of compliant issuers like Circle.

• While Tether still dominates market share, the stablecoin market may gradually split between trading liquidity assets (USDT) and financial infrastructure assets (USDC).

• Investors are increasingly reassessing Circle not simply as a crypto company, but as a digital dollar infrastructure provider.

Conclusion

Over the course of 2025, Circle succeeded in achieving both strong financial growth and the establishment of a regulatory foundation for its business model. The company’s 54% adjusted EBITDA margin in the fourth quarter suggests a level of operational efficiency more commonly associated with high-growth software companies.

The potential passage of the Clarity Act would represent more than regulatory approval. It could effectively formalize the role of USDC as a channel through which global capital liquidity enters the digital economy.

As a result, investors are increasingly beginning to view Circle not simply as a crypto issuer, but as a new type of financial institution built for the internet era.

If Circle successfully executes on its 2026 guidance and launches the Arc mainnet as planned, the company could emerge as a significant force not only within digital assets but across the broader global fintech landscape.

In that sense, Circle may now be entering a phase that goes beyond stablecoins, positioning itself as a foundational layer for internet-native financial infrastructure.

Legal & Disclosures

Disclaimer

This publication is for informational and research purposes only and does not constitute investment, financial, or legal advice, nor a recommendation to buy, sell, or hold any asset.

All analysis reflects publicly available information and reasonable assumptions at the time of writing and may change as market or regulatory conditions evolve.

This research was prepared independently and without compensation from any issuer or affiliated party. Readers are solely responsible for their own investment decisions. Exilist assumes no liability for any losses resulting from reliance on this publication.

Terms of Use

Exilist permits the fair use of its research materials for non-commercial and informational purposes, provided that the original meaning and analytical context are not altered.

When referencing or citing this publication, clear attribution to Exilist is required.

Any republication, translation, restructuring, commercial distribution, or derivative use of this material, in whole or in part, requires prior written consent from Exilist.

Unauthorized commercial use, misrepresentation of analytical conclusions, or redistribution without proper attribution may result in legal action.

In 2025, Korea’s KRW-denominated crypto markets reached a structural milestone: total unique participants trading across the five major won markets approached approximately 10 million.1

This expansion occurred even as regulatory requirements tightened and market dynamics shifted toward more risk-aware participation.

This report examines participation growth, trading behavior, and liquidity concentration trends — and what they imply for global projects targeting the Korean market.

1. Participation Growth Despite Regulatory Tightening

Data from Korea’s five major KRW exchanges — Upbit, Bithumb, Coinone, Gopax, and Korbit — show the combined participant count rising from approximately 5.82 million in 2023 to 9.91 million in 2025, representing over 70% growth in three years.2

This is a structurally important signal.

It suggests:

• Regulation is not suppressing participation.

• Retail traders are increasingly operating within regulated frameworks.

While the figure may not fully deduplicate users across platforms, the scale itself confirms that Korea remains one of the most retail-dense regulated crypto markets globally.

2. Trading Volume Adjusted, Not Disappeared

During the same period, aggregate KRW trading volume surged in 2024 before entering a moderation phase in 2025.

This pattern reflects market cyclicality rather than structural decline.

Participation expanded.
Capital velocity normalized.

In simplified terms:

Regulation → normalization
Participation → intact
Trading intensity → market cycle dependent

The market did not shrink. It recalibrated.

3. Liquidity Tilt Toward Blue-Chip Assets

One of the most notable structural shifts is asset concentration.

The share of trading volume attributed to the three largest assets — BTC, ETH, and XRP — increased from roughly 20.7% in 2023 to 29.3% in 2025.

This reallocation toward blue-chip assets reflects two overlapping forces:

Investor Risk Calibration

Retail participants appear to be prioritizing liquidity depth and asset credibility over speculative volatility.

Structural Institutionalization

Stricter listing standards, enhanced compliance expectations, and exchange risk controls increasingly favor higher-trust assets.

In this context, blue-chip concentration is not simply retail sophistication.
It is the product of both behavioral adjustment and regulatory architecture.

4. Implications for Project Strategy

Between 2023 and 2025, the Korean market shifted from volatility-driven amplification toward rule-aligned capital allocation.

As discussed in our earlier analysis, Korea 2025: The Weakening of Hype and the Reallocation of Leverage,3 the structural edge that once defined the Korean market — concentrated liquidity-driven hype — has meaningfully softened.

Traditional resource-intensive hype mechanisms — airdrops, short-cycle campaigns, event-based liquidity spikes — are yielding diminishing structural returns.

Durable engagement increasingly requires:

• Trust-centric positioning (security, transparency, proof structures)

• Institutional alignment (compliance readiness, auditability)

• Longer-horizon incentive design

• Messaging consistent with regulatory literacy

These are no longer differentiators. They are baseline expectations.

5. From Numbers to Rules: What Comes Next

The core question for 2026 is not market size.
It is governance architecture.

As discussions around Korea’s Digital Asset Basic Law and stablecoin frameworks accelerate, regulatory design will directly influence:

• Listing eligibility

• Issuance standards

• Disclosure requirements

• Stablecoin reserve management and audit structures

These decisions will shape:

• Market entry strategy

• Token economic design

• Liquidity planning

• Strategic partnership mapping

The next phase is not liquidity defining growth.
It is rules shaping liquidity.

Conclusion

Korea’s KRW market has entered a “10 million participant” era characterized by:

• Expanding retail participation

• Normalizing trading velocity

• Increasing blue-chip concentration

• Institutional reinforcement of market structure

Retail has not disappeared.
It has recalibrated within a regulated system.

For global projects, Korea is no longer primarily a volatility amplifier.
It is a structurally selective, institutionally mediated retail market.

Success now depends less on short-term hype and more on institutional trust, product robustness, and regulatory fluency.

The landscape of KRW stablecoins in Korea is shifting.
The core question has moved from “what coin gets built?” to “which combination of players assembles the winning puzzle?”

Following clearer regulatory guidance in 2025, the idea of a single company launching and dominating a KRW stablecoin is increasingly unrealistic. Instead, the market is shaping into a multi-party, consortium-based ecosystem where banks, fintechs, big tech platforms, and exchanges each play distinct roles.

A defining catalyst of this shift has been the strategic merger between Naver Financial and Dunamu (operator of Upbit) — a classic textbook example of the type of coalition that could lead the KRW stablecoin era.

This report maps the evolving player landscape across four major groups, analyzing their motivations, constraints, and partnership prospects in the context of Korea’s developing regulatory and market environment.

Regulation Creates a “Role Map”

Emerging regulatory frameworks are implicitly outlining what each category of player can and cannot do.

Contrary to early rumors of a strict “51% bank ownership requirement” for issuers, regulators have clarified that such a rule is not formally adopted. Instead, the FSC has signaled openness to non-bank participation if certain conditions are met — aligning with global norms rather than rigid, bank-exclusive models.

The broad policy direction now emphasizes:

• Consortium issuance with multiple actors

• Full reserve backing

• Banking-level prerequisites for trust and solvency

• Regulatory inspection and command authority

• Stress testing and central bank coordination for systemically important stablecoins

These structures are not relaxed in substance — they simply recognize that inclusiveness need not mean less rigor. The basic regulatory message boils down to:

“No single entity should control issuance to the exclusion of others; robust institutional checks are essential.”

This implicitly draws a role map: banks bring trust and capital, fintechs offer agility and UX, big tech contributes distribution scale, and exchanges supply liquidity and infrastructure.

Four Player Groups & Their Strategic Profiles

1) Banks: Trust & Capital, But Strategic Dilemma

Banks’ public stance is anchored in financial stability and consumer trust. Given that a KRW stablecoin functions similarly to a near-money instrument, banks emphasize anti-money laundering compliance, reserve management discipline, and systemic safety.

In the legislative process, banks have framed themselves as the natural issuers, highlighting:

• Capital strength

• Regulatory compliance capabilities

• Public trust in managing fiat-linked assets

Behind this posture, banks are vying to retain control of payment and settlement flows as digital currency markets evolve. Their influence over foundational rails — deposit management, settlement networks, credit flows — makes their involvement pivotal.

Banks’ strengths include:

• Established regulatory status

• Massive capital and stable balance sheets

• Public confidence as custodians of fiat value

• Existing payment and account infrastructures

However, weaknesses persist:

• Lower innovation speed compared to tech platforms

• Limited digital UX experience

• Legacy system constraints

Regulators have even acknowledged that a bank-only issuance model might undermine innovation competitiveness. As a result, banks are likely to seek strategic partnerships with technology and platform players while retaining governance influence.

2) Fintech & PG (Payment Gateways): Agile Innovators with Trust Gaps

Fintech firms and payment gateways are primarily focused on payments innovation and user experience. They see KRW stablecoins as a means to:

• Reduce transaction friction

• Enable fast, low-cost settlement

• Automate clearing via smart contracts

For many fintechs, the underlying opportunity is broader:
circumvent entrenched fee structures and establish new market positions in digital payments and financial flows.

Strengths of fintech players include:

• Rapid product iteration

• Consumer-centric UX design

• Competence in mobile and digital interface development

• Experience with cross-border fintech solutions

Weaknesses include:

• Limited capital compared to banks

• Weaker consumer trust around custodial assets

• Regulatory restrictions around direct reserve holdings

Under potential licensing frameworks, fintechs might still participate by ensuring reserve backing through banks or trust arrangements, forming part of issuance consortia rather than acting solo.

3) Big Tech: Distribution Power, but Regulatory Risk

Big tech platforms like Naver and Kakao have emerged as some of the most aggressive players in the KRW stablecoin arena.

Their publicly stated goal is seamless integration of digital currency into everyday platform experiences — from messaging and e-commerce to payments and rewards. Embedding stablecoins within large-scale digital ecosystems could dramatically expand usage by making crypto assets accessible within familiar user journeys.

Big tech’s real strategic ambition is broader:
dominate the future flow of user value by internalizing financial services into everyday digital behavior.

Their advantages include:

• User bases in the tens of millions

• Ubiquitous platforms (messaging, commerce, payments)

• Existing financial licensing footprints (in some cases)

But obstacles remain:

• Higher regulatory scrutiny

• Antitrust and systemic risk concerns

• Potential resistance from traditional banks

For these firms, the choice is strategic:
internalize capabilities vs. forge alliances that fulfill policy criteria without diluting platform power.

4) Exchanges: Liquidity Engines, Not Solo Issuers

Domestic crypto exchanges once toyed with the idea of launching their own KRW stablecoin. However, post-Terra regulatory pushback and political backlash have made solo issuance untenable. Exchanges now publicly state that they will participate only as partners rather than standalone issuers.

Regulatory proposals even contemplate clauses preventing exchanges from listing their own issuances due to conflicts of interest.

But exchanges remain indispensable as:

• Liquidity hubs

• On-chain infrastructure providers

• Connectivity layers to retail traders

Strong examples include established matching engines, wallet services, and significant trading volumes supporting stablecoin pairs.

Thus, exchanges are repositioned from issuers to “liquidity enablers” — critical partners in any successful consortium.

The Naver Financial–Dunamu Union: A Case Study in Optimal Assembly

The merger of Korea’s largest digital payments platform (Naver Financial) with the leading crypto exchange operator (Dunamu/Upbit) exemplifies the textbook consortium model most aligned with both regulatory design and practical market dynamics.

This union satisfies core structural requirements:

1. Distribution — massive user reach through payments and commerce networks

2. Liquidity — deep markets and trading infrastructure via Upbit

3. Governance — alignment with regulatory expectations through a credible financial entity

4. Political & Public Acceptance — positioning stablecoins as consumer infrastructure rather than speculative products

Such a combination dramatically accelerates market entry viability and expands foundational reach.

Conclusion: A Strategic Puzzle, Not a Solo Race

The 2025 KRW stablecoin competition is not a race of code or token design.
It is a race of coalition architecture.

The decisive question is which coalition:

• Fulfills regulatory trust requirements

• Controls broad distribution pathways

• Manages liquidity and technical capability

This triumvirate — trust, distribution, and liquidity — defines the winning structure.

Bank involvement provides foundational credibility.
Big platforms deliver distribution and user-scale integration.
Exchanges and infrastructure partners enable liquidity and technical execution.

No single actor can succeed alone.
The future belongs to strategic assemblies of complementary strengths.

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Disclaimer

This publication is for informational and research purposes only and does not constitute investment, financial, or legal advice, nor a recommendation to buy, sell, or hold any asset.

All analysis reflects publicly available information and reasonable assumptions at the time of writing and may change as market or regulatory conditions evolve.

This research was prepared independently and without compensation from any issuer or affiliated party. Readers are solely responsible for their own investment decisions. Exilist assumes no liability for any losses resulting from reliance on this publication.

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1. Introduction: Why KRW Stablecoins, and Why Now?

Stablecoins have evolved into core infrastructure across global digital asset markets. USD-pegged stablecoins such as USDT and USDC now function as liquidity rails for exchanges, DeFi protocols, and cross-border flows.

Korean investors have long relied on USD stablecoins as an intermediary bridge between the domestic KRW exchange ecosystem and global crypto markets. The dominant capital flow has been:

KRW deposit → USD stablecoin conversion → offshore deployment.

Despite Korea’s outsized retail participation in crypto markets, it has never operated a domestically regulated KRW-pegged stablecoin at scale.

In 2025, that conversation has shifted. The question is no longer whether KRW stablecoins should exist, but rather:

• Who will be permitted to issue them?

• Under what regulatory architecture?

• And within which institutional boundaries?

2. What Is a KRW Stablecoin?

A KRW stablecoin is a blockchain-based digital token designed to maintain a 1:1 peg with the Korean won.

The emerging regulatory consensus in Korea strongly favors:

• Full (100%) reserve backing in KRW-denominated assets

• Clear redemption rights

• Segregated custody of reserves

• Ongoing transparency and audit requirements

Algorithmic models are effectively excluded from serious policy consideration following the Terra/Luna collapse.

Two adjacent models influence the debate:

1. Deposit Tokens – Tokenized bank deposits issued by regulated financial institutions.

2. CBDC – A central bank-issued digital won controlled directly by the Bank of Korea.

KRW stablecoins, if approved, would likely sit between these models: privately issued, but heavily supervised.

3. Diverging Visions: The Bank of Korea, the FSC, and the National Assembly

Although public messaging suggests alignment around “safe stablecoins,” the three primary institutional actors approach the issue from meaningfully different angles.

The Bank of Korea (BOK): Monetary Stability as the Priority

The BOK does not primarily see stablecoins as digital assets. It views them as potential monetary instruments.

Key concerns include:

• Impact on monetary policy transmission

• Currency substitution risks

• Capital flow volatility

• Fragmentation of the payment system

The BOK has signaled preference for:

• Bank-centered issuance structures

• Tight oversight of reserve composition

• Systemic risk safeguards

• Clear separation between sovereign money and privately issued quasi-money

From the central bank’s perspective, the issue is not crypto innovation. It is monetary control and financial stability.

The Financial Services Commission (FSC): Innovation Within Prudential Boundaries

The FSC approaches KRW stablecoins as a matter of financial supervision rather than monetary sovereignty.

Its framework centers on:

• Mandatory 100% reserve backing

• Capital requirements

• Licensing and registration obligations

• Disclosure and audit standards

• Governance and internal control rules

Unlike the BOK, the FSC appears more open to allowing regulated fintech participation, provided systemic safeguards are satisfied.

Its stance can be summarized as:
Permit innovation, but within defined risk parameters.

The National Assembly: Post-Terra Legislative Normalization

Following Terra’s collapse, stablecoin regulation shifted from debate to inevitability in the political arena.

Multiple draft bills have circulated. While details vary, common elements include:

• Defined issuance criteria

• Redemption guarantees within specified timeframes

• Reserve transparency requirements

• Oversight mechanisms for both domestic and foreign stablecoins

• Tiered capital thresholds depending on issuer scale

The political objective is clear:
Normalize stablecoins under controlled legitimacy, rather than leave them in regulatory ambiguity.

4. Structural Implication: A Negotiated Architecture

Although the institutions differ in emphasis, none advocate for a fully decentralized issuance model.

If current trajectories hold, Korea’s stablecoin framework will likely feature:

• Licensed issuers only

• KRW cash and short-duration government bond reserves

• On-chain issuance on major public blockchains

• Periodic disclosure obligations

• Domestic supervisory authority over foreign stablecoin circulation

Rather than a crypto-native experiment, Korea appears to be constructing a regulated digital fiat extension layer.

5. Strategic Takeaways

1. Issuance is likely to favor consortium models combining banks, fintech firms, exchanges, and potentially large technology companies.

2. Regulatory capital and compliance capacity will be competitive advantages.

3. Stablecoin growth will be shaped more by institutional negotiation than by market hype.

KRW stablecoins could reduce structural reliance on USD stablecoins for domestic flows, but global liquidity bridges will remain relevant.

6. Conclusion

KRW stablecoins in 2025 are no longer a theoretical innovation discussion.

They represent an institutional design question.

The final architecture will be shaped not by crypto narratives, but by monetary doctrine, financial supervision philosophy, and legislative consensus.

Part II will examine the technological infrastructure, competitive positioning, and market implications beyond the policy layer.

Legal & Disclosures

Disclaimer

This publication is for informational and research purposes only and does not constitute investment, financial, or legal advice, nor a recommendation to buy, sell, or hold any asset.

All analysis reflects publicly available information and reasonable assumptions at the time of writing and may change as market or regulatory conditions evolve.

This research was prepared independently and without compensation from any issuer or affiliated party. Readers are solely responsible for their own investment decisions. Exilist assumes no liability for any losses resulting from reliance on this publication.

Terms of Use

Exilist permits the fair use of its research materials for non-commercial and informational purposes, provided that the original meaning and analytical context are not altered.

When referencing or citing this publication, clear attribution to Exilist is required.

Any republication, translation, restructuring, commercial distribution, or derivative use of this material, in whole or in part, requires prior written consent from Exilist.

Unauthorized commercial use, misrepresentation of analytical conclusions, or redistribution without proper attribution may result in legal action.