The Real Bottleneck Behind Crypto Liquidity

When I read today's news that Standard Chartered has partnered with Circle to become an independent gateway offering institutional clients USDC minting and redemption services, my first reaction was the same as with most news like this. I found myself wondering, once again: when will individuals finally get access to something like this?

As you've probably noticed, I often point out that the USDC or USDT sitting in your wallet is not really a claim on the dollars that Circle and Tether hold in reserve. In most cases, you don't have any right to redeem those dollars unless you've entered into a direct agreement with the stablecoin issuer. And neither Circle nor Tether is obliged to enter into such an agreement with you. In practice, Circle only does this with legal entities.

That is why the Standard Chartered announcement initially struck me this way. For institutions, not much really changes here. Ordinary users - regular token holders - are still in the same position, relying on someone somewhere being willing to buy their USDC for one dollar. And there has never been any obligation for anyone to do that, nor does that look likely to change.

But then I thought about this from another angle.

Take Bitcoin, for example. In this sense, it is neutral. Miners and node operators do not distinguish between retail users and institutions; all transactions are processed under the same rules for everyone.

Yesterday I wrote about how US spot Bitcoin ETFs sold $4.5 billion worth of BTC in June. Now imagine trying to sell that same amount yourself. Do you think you would actually be able to do it?

The real problem is not that ordinary people struggle to exit a crypto asset. The real bottleneck is getting access to fiat currency. That is where the banking system comes in - and that is where the real friction starts.

Stay outside the banking system, and liquidity is not a problem at all. Want to swap USDC for Bitcoin, or Bitcoin for USDC? No problem. Go to rabbit.io and swap any amount you like - even $4.5 billion.