Circle, the stablecoin provider, has announced an increase in USDC redemption fees for the second time this year, as reported by Bloomberg. Users who wish to perform rapid redemptions will now face additional charges for transactions exceeding $2 million per day.
Circle continues to offer tiered redemption options, which were introduced in February. Under the standard redemption plan, withdrawals exceeding $15 million incurred a fee of 0.1%. While standard redemptions are processed almost instantly, basic redemptions may take up to two business days to complete. Circle has automatically enrolled all clients in the standard plan, requiring manual approval for transfers to the basic plan.
With the updated fee structure, standard redemptions will now face charges of 0.03% for amounts between $2 million and $5 million, and 0.06% for amounts between $5 million and $15 million. Some sources interviewed by Bloomberg have expressed concerns that these new fees, which were added in September, could reduce USDC’s appeal in trading.
In the past 30 days, Circle has generated $136 million in fee revenue, making it one of the highest earners in the on-chain business sector. In comparison, its competitor Tether has earned $400 million during the same period and charges a fixed fee of 0.1% for redemptions over $100,000.
USDC’s market share has declined from 31% in February to 20% currently. This decrease is attributed to the entry of traditional finance players into the stablecoin market and the emergence of alternative stablecoin options. Meanwhile, Tether’s market share has risen from 52% to 70% during the same period.
These new fees highlight the challenges that USDC faces in a highly competitive market. As fees continue to rise, some users may shift towards alternative stablecoins.
Please note that the information provided in this article does not constitute investment advice. Investors should be aware of the high volatility and risk associated with cryptocurrencies and should conduct their own research.
