Circle launches cirBTC to target institutional Bitcoin liquidity market.

Circle Internet Group ($CRCL) is pushing beyond stablecoins with the launch of a new Bitcoin-wrapped token, ‘cirBTC’, aiming to capture ‘institutional demand’ for compliant, on-chain Bitcoin liquidity. The move positions Circle directly against incumbents in the tokenized Bitcoin market while it faces renewed scrutiny over regulatory headwinds and compliance questions. Circle said ‘cirBTC’ is backed 1:1 by native Bitcoin reserves and will debut on Ethereum (ETH) and Circle’s Arc blockchain. The token is integrated across the company’s Circle Mint infrastructure, with a primary focus on over-the-counter (OTC) trading desks, market makers, and decentralized finance (DeFi) lending venues—segments that increasingly seek Bitcoin exposure without the operational burden of holding and settling native BTC directly. The product rollout comes at a complicated moment for Circle’s equity story. Shares of Circle Internet Group ($CRCL) have been trading roughly in the $90–$100 range, well below the prior peak near $300—about a 70% drawdown from the 52-week high—despite being up about 25% year-to-date in 2026. Market attention has centered on U.S. policy risk after a draft of the CLARITY Act surfaced, which would prohibit stablecoin issuers from paying ‘passive yield’—a provision widely viewed as a direct challenge to stablecoin business models that rely on redistributing reserve income to users or partners. Circle’s exposure to that debate is substantial. In Q4 2025, the company reported $770 million in revenue and reserve income, underscoring the scale of its reserve-driven earnings model. Circle has previously highlighted that the overwhelming majority of revenue is tied to interest income from U.S. Treasuries backing USD Coin (USDC), with a significant portion of those proceeds shared with Coinbase ($COIN) and used to fund USDC-related incentives. After the CLARITY Act draft became public, Circle’s stock fell about 26%, reflecting investor concern that restrictions on yield-like distributions could compress margins or force a redesign of key go-to-market programs. Circle is also fielding questions about compliance responsiveness after an incident tied to Drift Protocol, in which roughly $285 million in assets were reportedly stolen and moved using Circle’s Cross Chain Transfer Protocol. Critics argue the company did not act quickly enough, intensifying scrutiny of its monitoring processes and risk controls—an uncomfortable spotlight for a firm that has built its brand around ‘regulatory-first’ infrastructure. Against that backdrop, ‘cirBTC’ represents a strategic bet that Circle’s credibility in stablecoins can translate into tokenized Bitcoin rails. The competitive field is already established: BitGo’s Wrapped Bitcoin (WBTC) has a market capitalization of around $8 billion, while Coinbase’s cbBTC sits near $5.9 billion, according to figures cited in the report. Circle is pitching an institutional-grade model similar to the one it uses for USDC and EURC, emphasizing on-chain reserve verification and custody standards designed for professional counterparties. For DeFi lending markets and market makers, the appeal is straightforward: a fully reserved wrapped BTC can be used as collateral, margin, or liquidity without managing native Bitcoin settlement workflows. If Circle can win trust among institutions that prioritize predictable operations and clear compliance frameworks, ‘cirBTC’ could become a meaningful extension of its on-chain product suite. Still, the launch does not insulate Circle from the near-term forces shaping its valuation. Heavy trading activity—reported at more than 12.6 million shares—signals heightened investor focus, but regulatory uncertainty around stablecoins and lingering concerns sparked by recent security-related flows may continue to drive volatility. The market is now watching whether Circle can navigate Washington’s evolving rulebook while proving it can compete in tokenized Bitcoin infrastructure without undermining the compliance narrative that underpins its broader business. Article Summary by TokenPost.ai Market Interpretation - Circle expands beyond stablecoins: Circle is launching cirBTC, a 1:1 Bitcoin-backed wrapped token, to capture institutional demand for compliant, on-chain BTC liquidity across Ethereum and Circle’s Arc blockchain. - Competitive challenge in tokenized BTC: Circle is entering a mature market dominated by WBTC (~$8B) and Coinbase cbBTC (~$5.9B), positioning cirBTC as an institutional-grade alternative emphasizing custody and reserve verification. - Equity sentiment is fragile: $CRCL trades around $90–$100, roughly 70% below its prior peak near $300, despite being ~25% YTD in 2026—highlighting a mix of recovery interest and persistent risk discounting. - Regulatory overhang remains central: A draft CLARITY Act provision that would restrict stablecoin issuers from paying “passive yield” is seen as a direct threat to reserve-income-sharing models; Circle shares fell ~26% after the draft surfaced. - Compliance narrative under scrutiny: Criticism tied to a Drift Protocol incident—where stolen funds reportedly moved using Circle’s Cross Chain Transfer Protocol—raises questions about monitoring speed and controls, pressuring Circle’s “regulatory-first” brand. Strategic Points - Product-market fit targets institutions: cirBTC is built to plug into Circle Mint and serve OTC desks, market makers, and DeFi lending venues that want BTC exposure without native Bitcoin custody/settlement complexity. - Leverage Circle’s core competency: Circle is attempting to transfer trust earned from USDC/EURC—reserve attestation, custody standards, and compliance posture—into the tokenized BTC category. - DeFi utility is the distribution wedge: Wrapped BTC is primarily valuable as collateral, margin, and liquidity. If cirBTC achieves deep integrations and liquidity, it can become embedded in lending and trading workflows. - Regulation may reshape economics: Circle’s business is heavily tied to reserve income (e.g., $770M in Q4 2025 revenue and reserve income). Any limits on yield-like distributions to partners/users could compress margins and force go-to-market changes. - Operational risk can offset product gains: Even with a strong product launch, perceived delays in compliance action (e.g., in cross-chain flows) can deter institutional adoption—the exact cohort cirBTC is designed to attract. - Near-term signal: volatility and attention: Reported volume of 12.6M+ shares suggests heightened investor focus; catalysts now hinge on U.S. policy clarity and Circle’s ability to defend its compliance edge while competing with incumbents. Glossary - Wrapped Bitcoin (wBTC / tokenized BTC): A token on another blockchain (e.g., Ethereum) that represents Bitcoin, typically backed 1:1 by BTC held in custody, enabling BTC-like use in DeFi. - cirBTC: Circle’s new wrapped Bitcoin token, stated to be backed 1:1 by native BTC reserves and launched on Ethereum and Arc. - Circle Mint: Circle’s institutional platform for minting/redeeming Circle-issued tokens and accessing liquidity rails aimed at professional counterparties. - OTC (Over-the-Counter) trading desk: A venue for large trades executed bilaterally/off-exchange to reduce market impact and manage settlement directly. - DeFi (Decentralized Finance): On-chain financial services (lending, trading, derivatives) run via smart contracts rather than centralized intermediaries. - Reserve income: Interest earned on assets (often U.S. Treasuries) held to back stablecoins; a key revenue driver for stablecoin issuers. - CLARITY Act (draft): Referenced U.S. policy proposal; the cited draft provision would restrict stablecoin issuers from paying “passive yield,” potentially impacting revenue-sharing and incentive programs. - Cross Chain Transfer Protocol (CCTP): Circle’s infrastructure for moving value across blockchains; in the article, it is referenced in connection with alleged movement of stolen assets. - Market cap: The total value of a token in circulation (price × supply), used to compare the relative size of wrapped BTC products.