Circle's Stablecoin Clearing Layer: scaling institutional adoption of stablecoin

Circle, the largest regulated USD stablecoin issuer, posted blockbuster Q2 2025 results last week:

• USDC supply: +90% YoY

• Revenue: +53% YoY

• Adjusted EBITDA: +52% YoY

• Launching Arc, a payment-focused and privacy-enabled Layer-1 blockchain

  
  

But buried beneath the headlines is the real strategic move of the quarter: the launch of the Circle Payments Network (CPN).

CPN is Circle’s global regulated stablecoin clearing solution. It combines:

• Cross-border orchestration with cross-chain interoperability for stablecoin payments with no slippage

• Onchain FX clearing between regulated stablecoin currencies like USDC and EURC

• An institutional marketplace for banks and fintechs to capture monetization opportunities

  
  

In short: CPN = SWIFT + RTGS + onchain FX clearing

In this week’s research, we’ll break down:

1. How CPN actually works

2. What scaling problems does CPN solve

3. What does it mean for the stablecoin payment space and the broader financial services industry

   
   

Let’s dive in.

How does CPN work?

Stablecoin sandwich (fiat-stablecoin-fiat) is often used to describe a cross-border payment process where stablecoin is used to transfer value between sending currencies and receiving currencies. For example, a sending party converts Mexican pesos into a dollar-pegged stablecoin, e.g. USDC. USDC is then transferred instantly to the receiving country, where it is converted back to local fiat currency by an offramp provider, such as Euros.

Stablecoin sandwich is often cited as a more efficient payment routing than the traditional SWIFT and correspondent banking model. See the workflow comparison between traditional correspondent banking and a stablecoin sandwich below.

While in theory stablecoin offers a faster and cheaper model, in practice, due to frictions in on/offramping, inferior onchain liquidity and regulatory risks, institutions are sticking to their SWIFT and correspondent banking rail for high value transfers. 

Instead the stablecoin sandwich has found product market fit in FX corridors where traditional banking rails are lacking as I have pointed out in previous research note here.

However, what if the liquidity, on/offramping and regulatory concerns get solved? Then stablecoins have a real shot at offering an additional viable rail for financial institutions to move money. 

And solving those key issues is what Circle Payments Network does.

On/offramp friction

Rather than forcing end-customers to piece together multiple services just to receive funds, CPN connects directly with regulated financial institutions — including Virtual Asset Service Providers (VASPs), payment service providers (PSPs), exchanges, and OTC desks. Once plugged into CPN, these institutions are seamlessly connected to one another.

For clients, this means funds can land instantly and directly in their bank accounts, even if the sender uses a different fiat currency or a new stablecoin. All the complexity of FX quoting, conversion, and settlement is abstracted into backend logic.

The result: a transaction where Party A sends USD from the U.S. and the recipient in the Philippines receives PHP in their bank account looks and feels like a traditional wire transfer but with 100x faster settlement, 24/7 availability, and instant finality powered by stablecoins.

Inferior onchain FX liquidity

Onchain FX liquidity today remains limited. While traditional finance sees $10T+ in daily FX turnover, the entire stablecoin market is only $250B, with daily trading volumes in the low tens of billions.

This gap is where CPN can unlock new opportunities. A bank connected to CPN can leverage its existing FX trading desks to provide tighter pricing and capture order flow whenever there’s demand on the other side.

Zodia Markets, a digital asset exchange backed by Standard Chartered, has been doing brisk business in G10 FX businesses with 9 non-USD stablecoins being listed already. 

“CPN as an open platform, it has the potential to foster a competitive onchain marketplace for onramps and offramps, FX, and other services, further lowering costs and improving access.”

Over time, as onchain FX liquidity deepens, banks will be able to quote FX swap prices directly onchain, eliminating the need to rely on offchain trading desks altogether.

Regulatory risks

By restricting access to regulated financial institutions in approved jurisdictions, Circle is taking a regulation-first approach with CPN.

“Circle has built a rigorous governance framework for CPN that requires participating financial institutions to meet global Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) standards, along with economic sanctions requirements.”

This ensures that regulated institutions only transact with other regulated institutions. Combined with its focus on GENIUS and MiCAR-compliant stablecoins and Circle’s position as the most trusted U.S. dollar stablecoin issuer, the model significantly reduces regulatory risk.

What does CPN mean for stablecoin payment space?

Functionally CPN = SWIFT + RTGS + FX clearing for stablecoins

Regulatorily CPN = a network where only regulated financial institutions can interact with each others

Financial institutions: since CPN addresses the regulatory risk via strict membership and product criteria, financial institutions can leverage it for 1) instant high value cross border transfers (stablecoin sandwich) and 2) monetize their capabilities as product offerings on the network.

“CPN does not move funds directly; rather, it serves as a marketplace of financial

institutions and acts as a coordination protocol that orchestrates global money movement

and the seamless exchange of information.”

As a technology solution, CPN provides a regulation-first, no-slippage and interoperable cross-chain regulated stablecoin orchestration platform for financial institutions executing payments in stablecoins. 

And with the launch of Circle’s Arc blockchain, an privacy enabled payment blockchain that is likely to serve as a backend infrastructure for the CPN, financial institutions can complete transactions in stablecoin with end-to-end privacy.

Tokenized deposits/Stablecoin issuers: “These institutions issue regulated payment stablecoins that serve as the primary medium of exchange within CPN. Stablecoin issuers ensure transparent reserves, regulatory compliance, and underlying fiat liquidity for seamless cross-border transactions.”

Although Circle is building CPN, it clearly recognizes that the future of digital money will be multi-issuer and multi-product. That future includes tokenized bank deposits from players like JPMorgan’s Kinexys and Citi Token Services, as well as regulated stablecoins emerging from markets such as Hong Kong, Japan, and the UK.

CPN is positioning itself to become the clearing layer for all tokenized payment rails: the infrastructure that connects diverse issuers and currencies into a single interoperable network.

Technology solution and financial services providers: they will have a large addressable market equipping CPN members with a range of services such as fraud and risk management, wallet infrastructure, custody solutions, billing and invoicing, and compliance and transaction monitoring solutions, supporting their business and operational needs.

Conclusion

The stablecoin clearing challenge/opportunity is a $100B+ annual market for monetization including FX swaps, on/offramping services and pure cross-border transaction volume. 

Circle is well positioned to build Circle Payments Network as the infrastructure to capture a big share of that market. Although it will likely face serious competition from big players. For example while Visa and MasterCard have no direct competitor product to CPN,  both are building pieces that resemble parts of it.

VisaNet + Stablecoin Settlement

Visa already runs VisaNet, its global payment network, which clears and settles card transactions across 200+ countries. Recently, Visa has started experimenting with settling merchant payments in USDC stablecoin on blockchains like Ethereum and Solana, with partners such as Wirex and Worldpay.

This isn’t a full orchestration layer like CPN but shows Visa is embedding stablecoins into its existing network. Think of it as "CPN-lite" for Visa’s card rails.

MasterCard’s Multi-Token Network (MTN)

Mastercard launched MTN as a multi-asset settlement and clearing layer for blockchain-based payments. It’s designed to handle CBDCs, stablecoins, and tokenized deposits in a single network.

Mastercard positions MTN as a protocol layer where banks, fintechs, and wallets can interoperate — very similar to Circle’s positioning of CPN as the “clearing layer for tokenized payments.” This is the closest analogue to CPN.

Winning the stablecoin clearing opportunity is a speed-to-market and network effect race. 

Who will be the winners? Subscribe and stay tuned.

Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.