Circle, a provider of stablecoins, has recently raised its USDC redemption fees for the second time this year, according to a report by Bloomberg. Users who wish to perform rapid redemptions will now have to pay additional fees for transactions exceeding $2 million per day.
The fee structure has been updated to include tiered redemption options, which were first introduced in February. Under the standard redemption plan, a fee of 0.1% was applied to withdrawals over $15 million. While standard redemptions are processed almost instantly, basic redemptions may take up to two business days to complete. Circle has registered all its clients in the standard plan, and manual approval is required for transfers to the basic plan.
With the updated fees, standard redemptions will now incur 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 have expressed concerns that these fees, which were added in September, could diminish the appeal of USDC in trading.
In the past 30 days alone, 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 seen a decline from 31% in February to 20% currently. This drop is attributed to the entry of traditional finance players into the stablecoin market and the emergence of alternative stablecoin options. On the other hand, Tether’s market share has risen from 52% to 70% during the same period.
The new fees highlight the challenges that USDC faces in a highly competitive market. Due to the rising fees, some users may opt for alternative stablecoins.