08-13-2025 
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Stablecoin issuer Circle (NASDAQ: CRCL) posted a nine-figure loss in its first quarter as a public company, while President Trump’s crypto profits are in the 10-figure range and heading higher.
- Circle posts Q2 loss, preps Arc stablecoin network
- Crypto/tradfi lines continue to blur
- Paxos seeks bank charter, banks seek to end stablecoin rewards
- Banks want level playing field for tokenized equities
- Senate Dems list market structure flaws
- Trump’s crypto earnings to soar after WLFI-ALT5 Sigma deal
On August 12, Circle, issuer of the USDC stablecoin, released its first quarterly report since listing on the Nasdaq exchange in June. While the company wants you to focus on its ‘revenue and reserve income’ growing 53% year-on-year to $658 million, the company booked a net loss of $482 million thanks to $591 million in non-cash charges related to its initial public offering (including $424 million in stock-based compensation).
The cost of USDC’s presence on digital asset exchanges like Coinbase (NASDAQ: COIN) and Binance was laid bare in the $407 million that Circle paid in ‘distribution and transaction’ costs. That figure was up nearly two-thirds from the same period last year, based on Circle’s urgent need to enshrine USDC’s role in the digital asset economy before rivals other than USDT-issuer Tether join the party.
On that note, Circle announced plans for Arc, its new “open Layer-1 blockchain,’ which aims to provide an “enterprise-grade foundation for stablecoin payments, FX, and capital market applications.” The Ethereum Virtual Machine-compatible Arc, which expects to launch a public testnet this fall, will use USDC for its ‘gas’ fees and be “integrated across Circle’s platform and services.”
On the earnings call, Circle CEO Jeremy Allaire said Arc was intended to allow institutions “to pay fees on blockchains in a fast, predictable manner that would be simple from an accounting perspective and could deliver very low cost and stable fees.” Arc will also offer “configurable privacy controls with opt-in confidential transfer features.”
Not everyone was blown away by Circle’s Arc news, with some critics questioning its self-description as a true Layer-1 and suggesting that the fact that Arc’s validators will be ‘Circle vetted’ makes Arc more of “a consortium chain.”
On the call, Allaire said Circle “ultimately aspire” for Arc to be “operated by a fairly large distributed network of professional validators … that can meet the operational security and compliance expectations for people running this critical infrastructure. We want that to be highly geographically distributed. We want that to be distributed across major institutions as well.”
Circle’s shares jumped as the market opened Tuesday but closed the day at $163.21, a modest 1.3% gain from Monday’s close. That’s well off CRCL’s nearly $300 peak in the euphoric period following the U.S. Senate approving the stablecoin-focused GENIUS Act in late June.
The shares shed 5% in after-hours trading. While investors may have been spooked by the Q2 loss, it probably didn’t help that Circle announced plans to offer 10 million shares of its Class A common stock to the public. Two million of these are coming from the company itself, while stockholders are offering the other eight million.
Crypto, tradfi distinctions blurring
Circle’s archrival, Tether, is in the process of building out its own stablecoin payment network(s) to support USDT. And while Allaire promoted the prominent role that USDC is expected to play in payment networks like Remitly, MoneyGram, Zeps, Stripe and even Visa (NASDAQ: V) and Mastercard (NASDAQ: MA), those networks may have plans of their own that don’t include USDC.
On August 3, the Paradigm venture capital group posted a product marketing job listing that spoke of a stealth project called Tempo, “a high-performance, payments-focused blockchain built as a collaboration between Paradigm and Stripe.”
In February, Stripe completed its $1.1 billion acquisition of Bridge, a stablecoin integration platform for merchants that has the ability to issue new stablecoins, including USDB, which launched in May. That same month, Stripe made its Bridge-powered Stablecoin Financial Accounts available to customers in over 100 countries, offering the use of both USDC and USDB.
Stripe also has stablecoin tie-ups with Visa, which Bloomberg noted this week “hasn’t ruled out the possibility of launching a stablecoin of its own in the future.” Bloomberg quoted Visa’s head of crypto Cuy Sheffield saying stablecoins were “just another mechanism for value exchange” that he saw as “massively expanding our addressable market.”
Many TradFi institutions, including Bank of America (BOA), JPMorgan (NASDAQ: JPM), and other household names have openly mused about their own stablecoin initiatives, whether individually or collectively. The fear of some stablecoin issuers is that the brand recognition of these entities far outstrips their own, which could allow these stablecoin newcomers to make up for lost ground in a major hurry.
Banks protest stablecoin interest posing as rewards
On August 11, Paxos joined Circle and Ripple Labs in applying for a national trust charter from the Treasury Department’s Office of the Comptroller of the Currency (OCC). To date, only a single blockchain firm (digital asset custodian Anchorage Digital) has been issued a national charter.
Paxos, issuer of PayPal’s (NASDAQ: PYPL) PYUSD stablecoin, already holds a state-level trust charter with the New York Department of Financial Services (NYDFS) and is looking to convert this into a national charter. Last week, Paxos reached a $48.5 million settlement with the NYDFS over the company’s due diligence and anti-money laundering shortcomings.
As the TradFi and blockchain sectors cross-pollinate, turf wars are inevitable. For instance, while the GENIUS Act prohibits stablecoin issuers from offering yield to token holders, companies like Coinbase issue ‘rewards’ that are yield in everything but name.
On August 12, the Bank Policy Institute (BPI) issued a statement asking Congress to close “the payment of interest loophole for stablecoins.” The BPI singles out exchanges acting as “a distribution channel for stablecoin issuers or business affiliates” that allow the GENIUS Act’s yield rules to be “easily evaded and undermined by allowing payment of interest indirectly to holders of stablecoins.”
The BPI, a ‘nonpartisan’ advocacy group representing U.S. banks, claims stablecoin issuers “are not regulated, supervised or examined in the same way” as bank deposits, money market funds or investment products. Accordingly, “payment stablecoins should not pay interest the way highly regulated and supervised banks do on deposits or offer yield as money market funds do.”
Banks and credit unions have previously expressed unease at the thought of depositors withdrawing their cash and plowing it into stablecoin-based ‘reward’ programs. The BPI doubles down on this fear, warning of “greater deposit flight risk, especially in times of stress, that will undermine credit creation throughout the economy.” This could result in “higher interest rates, fewer loans, and increased costs for Main Street businesses and households.”
Banks see tokenized equities as uneven playing field
Banks are also pushing back on moves by exchanges like Coinbase, Kraken and Robinhood (NASDAQ: HOOD) to offer tokenized equities to their customers. Coinbase recently declared that “everything should be tokenized” but Wall Street is warning that danger awaits if the blockchain firms aren’t held to the same rules as the banks.
The Securities and Exchange Commission (SEC) recently issued its Project Crypto blueprint for how the agency will (or won’t) apply regulatory guardrails to digital assets. Among the proposals was for the SEC to “work with firms seeking to distribute tokenized securities within the United States.”
Advocates claim tokenization will allow consumers to trade outside traditional trading periods, allowing swifter responses to changing market conditions. While some Wall Street players appear interested in joining this party, others warn that a two-tiered regulatory scenario risks splitting the market, making both halves vulnerable to greater price swings.
Last month, the Healthy Markets Association (HMA) investor advocacy group sent SEC Chair Paul Atkins a letter expressing their belief that “tokenization of assets presents opportunities for market improvements that the Commission and Congress should explore.”However, HMA expressed “profound concerns with the lack of enforcement of the applicable federal securities laws and rules, as well as the processes through which exemptions from them are being sought.”
Politico quoted HMA chief Tyler Gellasch saying, “[c]reating loopholes in traditional markets in the name of crypto is a helluva gamble to take with markets relied upon by millions of American retirees, college savers and businesses.”
Market-maker Citadel Securities also wrote the SEC, saying it was “untenable to grant ‘look-alike’ products marketed as an alternative to listed equity securities broad exemptive relief from longstanding regulations that are core to the SEC’s mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.”
It’s worth noting that the Citadel and HMA letters were both sent well in advance of the SEC’s Project Crypto announcement, so if these concerns were taken to heart, the SEC’s leadership isn’t yet showing it.
Senate Dems see market structure flaws
Over on Capitol Hill, Democrats on the Senate Banking Committee have some thoughts regarding the Responsible Financial Innovation Act (RFIA), aka the Senate version of the CLARITY Act digital asset market structure bill passed by the House of Representatives last month.
Late last month, the Committee’s Republican leadership issued an RFIA discussion draft just before the Senate recessed for the month of August and called for submissions from stakeholders and other committee members. So far, many of the submissions from crypto operators have focused on the draft’s treatment of decentralized finance (DeFi) platforms as well as the novel concept of ‘ancillary assets.’
On August 11, the Committee’s ranking member Elizabeth Warren (D-MA) issued a fact sheet indicating the Democratic staff had reviewed the RFIA draft and identified “five major flaws that the Senate must fix” before garnering Dem support.
Flaw #1 is the ‘ancillary asset’ concept, which Dems claim represents a “superhighway for traditional securities to escape the SEC’s authority.” The concept isn’t limited to digital assets, opening the door for companies to sell all manner of assets to investors “without any of the protections afforded by federal and state securities laws.”
Oddly enough, this stance finds the crypto-critical Warren in rare agreement with the crypto-friendly Andreessen Horowitz (a16z) venture capital group, which also believes this concept is too broadly defined. (Politics really does make for strange bedfellows.)
Flaw #2 is the freedom that will be given to Federal Deposit Insurance Corporation-insured banks to “directly engage in a broad range of crypto activities on behalf of customers and for their own accounts.” This would “bring crypto activities firmly within the taxpayer safety net, threatening the Deposit Insurance Fund, the safety and soundness of the banking system,” while increasing “the risk of a financial meltdown.”
Flaw #3 is the RFIA’s failure to “close any of the serious gaps” in its treatment of money laundering, terrorist financing, and sanctions evasion. Controversial DeFi platforms like coin mixers are spared from having to conform to even “basic obligations” (although last week’s guilty verdict against Tornado Cash co-founder Roman Storm suggests the courts might view things differently).
We’ll skip Flaw #4 for just a moment, but Flaw #5 is RFIA’s “exemptions and loopholes” for tokens that push the SEC aside, “shunting the vast majority of crypto transactions over to the [Commodity Futures Trading Commission’s] weak, under-resourced, deregulatory regime.”
Regardless of Warren’s objections, both Senate and House Dems have shown little backbone when it comes to actually voting against crypto rules they find flawed. Behind the scenes, they admit their bluster is performative, more concerned with not bringing the massive weight of crypto campaign funding down on their heads.
That threat was underscored in an August 12 Semafor report detailing efforts by the Coinbase-funded astroturf group Stand with Crypto (SwC) to press lawmakers into supporting whatever market structure effort emerges from the Senate. In addition to deluging politicians with calls and emails, SwC is hosting events in multiple cities over the next month, similar to its ‘get out the crypto’ vote efforts ahead of last November’s elections.
WLF in $1.5 billion treasury deal with ALT5 Sigma
Getting back to Flaw #4, Warren fretted about RFIA’s failure to “rein in presidential crypto corruption.” There’s no question that Trump’s crypto reach is extensive, including the $TRUMP memecoin, the DeFi project World Liberty Financial (WLF) and its WLFI and USD1 tokens, non-fungible token (NFT) collections, the various crypto aspects of Trump Media & Technology Group (TMTG), block reward mining operations, crypto-themed merch, and more.
The New Yorker’s David Kirkpatrick recently attempted to calculate how much the Trump family may have profited during Donald’s time as President. Skipping contributions from hotels and the like, Trump’s crypto ventures are estimated to have improved his bottom line by around $2.4 billion since he first dipped his toes into these waters in 2022. While those gains are largely paper wealth, it nonetheless represents over 43% of the profits Trump has reportedly enjoyed during his time in politics.
Speaking to CBS News over the weekend, Trump associate David Bailey—organizer of the BTC conference at which Trump spoke during his 2024 presidential campaign—rejected the notion that Trump “embraced this industry to enrich himself. I think that he just sees the same potential that I see.”
Speaking of potential, another major Trump payday appears on the way. On August 11, Blockchain fintech firm ALT5 Sigma Corporation (NASDAQ: ALTS) announced plans to raise $1.5 billion via the sale of 200 million shares of its common stock.
This comprises a registered direct offering of 100 million shares at $7.50 apiece, plus the sale of another 100 million shares at the same price via a concurrent private placement. “A select number of the world’s largest institutional investors and prominent crypto venture capital firms” participated in the offerings, but no names were mentioned.
The $750 million in the private placement came largely in the form of WLFI from lead investor WLF. In exchange, WLF got one million ALT5 shares and 99 million pre-funded warrants at an exercise price of 1¢.
ALT5 plans to use the sale proceeds to “fund the acquisition of $WLFI tokens, to establish the Company’s cryptocurrency treasury operations as well as to settle existing litigation, pay existing debt, fund the existing Company’s business operations and for working capital and general corporate purposes.”
As a result of the deal, WLF co-founder/CEO Zach Witkoff will become ALT5’s chairman, WLF co-founder Eric Trump will be an ALT5 director, WLF co-founder/CEO Zak Folkman will be a board observer and Matt Morgan will be chief investment officer.
Morgan told The Block that the deal puts a value of $0.20 on WLFI tokens, which previously have been used only for ‘governance’ votes on the WLF platform. During its initial sale, WLFI was priced at just 1.5¢ apiece, which promises a hefty payday for early WLFI holders once the tokens start public trading (possibly later this month).
On August 12, Eric Trump tweeted his excitement at joining ALT5’s board, adding that the “synergies” between WLF’s USD1 stablecoin and ALT5’s payment tech “are unmatched.” Eric said he and his brother Don Jr. are “deeply committed to the success of this company.”
Don Jr. (also a WLF co-founder) tweeted his own excitement, saying that between ALT5’s “treasury strategy of acquiring WLFI tokens” and the aforementioned synergies, “we believe something extraordinary is being created.”
Both brothers made sure to point out that the WLF community recently voted to make WLFI tradable “on both major centralized exchanges and decentralized platforms, ensuring global governance reach and liquidity.” For the record, despite being nearly a year old, WLF has yet to actually launch any DeFi functionality.
Rumors of the WLF-ALT5 deal surfaced last week in a Bloomberg report, leading to a dramatic but temporary spike in ALT5’s share price. Monday’s confirmation of the rumors did little to reinflate the stock, which closed Tuesday at $5.96, well below its ~$11 peak last Friday.
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