Arthur Hayes says the crypto industry is walking straight into a minefield. In his latest essay, Assume the Position, Arthur called Circle’s IPO the beginning of what he sees as a reckless wave of stablecoin startups, backed by clueless investors and “charismatic bullshitters.”
“I hope this essay can prevent a rapid expansion of your sphincter,” he wrote, warning traders not to fall for the hype around so-called stablecoin companies entering public markets. According to Arthur, the Circle IPO is the exact type of event that sets off a bubble—and this one ends with billions vaporized.
Arthur also called out Circle’s CEO Jeremy Allaire for taking a backseat to Coinbase’s Brian Armstrong, saying, “Jeremy has no choice but to assume the position at the behest of his daddy gimp Brian.” He sees Circle’s entire business as propped up by this relationship.
And since Circle gives 50% of its net interest income to Coinbase in exchange for distribution, Arthur doesn’t think it can ever catch up to Tether.
Arthur says crypto traders must understand how money actually moves
Arthur explained that professional traders in crypto, unlike traditional finance, must understand fiat flows inside out. This is because exchanges often operate in legal gray zones, making fiat deposits and withdrawals tricky.
Back in 2013, Arthur used to buy Bitcoin from individuals using bank wires or straight-up physical cash. When he moved to exchanges, it was never simple—most had no reliable bank accounts, and some just disappeared with users’ money.
To survive in that mess, Arthur had to learn how banks in Greater China—specifically Hong Kong, mainland China, and Taiwan—moved cash. He says this is where all true innovation in crypto started, including stablecoins.
Bitfinex, one of the largest exchanges at the time, had local bank accounts in Hong Kong, which allowed him to send wires quickly. He lived across the street from nearly every major bank and would carry cash between them to cut fees.
On the mainland, he opened multiple bank accounts in Shenzhen using basic Mandarin. With these, he accessed liquidity across the region. But as banks started shutting down crypto-related accounts, the whole system became unstable. So when Tether launched, using the Omni protocol to send USD tokens on top of Bitcoin, it solved a real problem. No more wires. No more disappearing intermediaries. Crypto had its own money rail.
But one exchange offering USDT wasn’t enough. What made it stick was Greater China’s hunger for dollars. With frequent devaluations and low local deposit rates, traders and citizens wanted USD. USDT gave them that.
Arthur breaks down how Circle failed where Tether won
Arthur argued that Tether succeeded because it solved a problem and had built-in distribution through Bitfinex. USDT became the main trading pair during the ICO boom in 2017.
When Ethereum launched in 2015, altcoin trading took off, and people needed a stable USD pair. That pair was USDT. Poloniex, Yunbi, Binance—all the major exchanges used USDT because it worked. It also allowed traders to move funds between platforms easily.
Circle came much later. And to Arthur, it was always behind. It bought Poloniex at the top of the market and sold it later to Justin Sun at a huge loss. Arthur mocked Circle for trying to copy Tether without the infrastructure or trust. He also pointed out that Circle is based in Boston, “yuck!”—far removed from the real centers of crypto liquidity.
Even after all this, Circle still pays Coinbase half of its earnings just to access users. And yet its market cap is only 39% of Coinbase’s. Arthur doesn’t see that as sustainable. Meanwhile, Tether pays nothing to holders, keeps all its treasury yield, and dominates usage globally. “Tether is the most profitable bank per employee in the world,” he said.
Arthur predicted that new stablecoin issuers will chase Circle’s IPO path, hoping to cash in. He said most will rely on “financial engineering, leverage, and amazing showmanship” to raise funds.
But they’ll crash hard because they have no real distribution. “If a stablecoin issuer or tech provider cannot distribute through a crypto exchange, Web2 social media giant, or legacy bank, they have no business,” Arthur warned.
He doesn’t believe banks will partner with startups. He spoke with a board member of a major bank who admitted, “We are f*cked.” That person said stablecoins had already taken over in places like Nigeria, where a third of GDP runs through USDT despite crackdowns. But the bank couldn’t react because regulations required them to keep bloated headcounts.
He explained that even if stablecoins are adopted by banks, they’ll be run internally and never involve third-party issuers. So any startup promising a bank partnership is lying.
Social media firms will also go solo, like Facebook tried with Libra. Arthur said after banks deplatformed Trump’s family during Biden’s term, the president is not about to protect them now.
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