Breakthrough in Stablecoin Infrastructure: How Circle's Native USDC is Transforming Prediction Market Payments and Compliance Systems

Polymarket founder Shayne Coplan stated in the partnership announcement: “Supporting a consistent, USD-denominated settlement standard with USDC will further enhance market integrity and reliability as platform participation continues to grow.” The background for this shift is that prediction markets have become one of the fastest-growing sectors in the cryptocurrency space. In January 2026 alone, Polymarket’s monthly trading volume reached $7.66 billion, ranking as the second-largest prediction market platform worldwide.

Core of the Partnership: From Cross-Chain Bridges to Native Issuance

Circle and Polymarket’s collaboration centers on a critical upgrade to their technical infrastructure. Polymarket will migrate its settlement system from the currently used Polygon cross-chain bridged USDC to a native USDC directly issued and custodyed by Circle.

Currently, users on Polymarket perform prediction trades using a bridged asset called USDC.e. While this asset is pegged to USDC in value, its circulation depends on cross-chain bridge protocols. Cross-chain bridges have long been one of the most vulnerable links in the crypto ecosystem, often targeted by hackers. The introduction of native USDC means that Polymarket will completely eliminate reliance on such intermediary protocols.

Native USDC is issued directly by Circle’s regulated entity, supporting 1:1 USD redemption. This not only enhances security but also provides users with a more direct and transparent asset redemption pathway. This transition is expected to be completed within the coming months.

Stablecoin Advantages: The Ideal Payment Tool for Prediction Markets

Stablecoins play an indispensable role in settlement within prediction markets. Unlike traditional cryptocurrencies, stablecoins are pegged to fiat currencies like the US dollar, avoiding the price volatility that can disrupt prediction contracts.

For prediction platforms like Polymarket that involve real-world event outcomes, the stability of the settlement medium is crucial. Native USDC offers a “capital-efficient” and scalable solution, enabling global users to participate in markets using a unified USD-denominated standard without worrying about exchange rate fluctuations or asset devaluation.

By 2025, the total global stablecoin transaction volume surged to approximately $33 trillion, a year-over-year increase of about 72%. This data clearly indicates a strong market demand for efficient, programmable, low-cost payment methods, with prediction markets emerging as one of the new application scenarios. From a technical perspective, the on-chain nature of stablecoins allows for nearly real-time transaction settlement, in stark contrast to traditional financial systems that require days for clearing. This efficiency advantage is especially valuable in fast-changing event prediction markets.

Market Expansion: Competition and Opportunities in the Prediction Sector

The prediction market sector is attracting increasing attention from mainstream participants. Besides native platforms like Polymarket and Kalshi, several major crypto exchanges have entered this space over the past year. This competitive landscape has accelerated infrastructure upgrades and innovation across the sector. Circle’s choice to partner with Polymarket reflects the significant potential of prediction markets as emerging use cases for stablecoins.

In 2025, Polymarket handled over $22 billion in nominal trading volume, a 57% increase from 2024. This growth trend indicates that event prediction is shifting from a niche activity to a recognized financial service category.

Regulatory progress is also underway. Regulatory agencies in multiple US states are reviewing whether prediction market contracts constitute gambling, and the participation of compliant stablecoin providers like Circle could help establish a more standardized operational framework for the industry.

Regulatory Significance: A New Chapter in Stablecoin Application Oversight

The partnership between Circle and Polymarket occurs amid a clarifying regulatory environment for stablecoins. Globally, authorities are strengthening oversight of stablecoin issuance and use, which creates opportunities for compliant participants.

Hong Kong is expected to issue its first compliant stablecoin licenses in early 2026, requiring applicants to meet banking-level regulatory standards, including high-liquidity asset reserves, rapid redemption mechanisms, and strict information reporting. In this context, Circle’s role as a regulated stablecoin issuer and its native USDC demonstrate a model: even in innovative financial sectors, stablecoins can operate within regulatory frameworks.

Polymarket’s decision to shift to native USDC aligns with the global development trend of the stablecoin market. As regulatory frameworks become clearer worldwide, compliance is increasingly becoming a core requirement for market access.

For prediction markets, adopting fully regulated stablecoins as settlement tools may help alleviate regulatory concerns about their legitimacy and lay a foundation for long-term growth.

Market Context: Stable Value Amid Market Fluctuations

Recent cryptocurrency markets have experienced some volatility. According to Gate’s latest data, Bitcoin is currently priced at $64,877.1, with a market cap of $1.56 trillion; Ethereum is at $1,913.66, with a market cap of $253.2 billion.

In this environment, the value of stablecoins as a hedge against volatility is even more apparent. Gate Research Institute’s recent report indicates that market funds are migrating toward stable assets amid fluctuations.

The sustained growth in stablecoin trading volume mainly stems from practical applications such as settlement, cross-border transfers, and liquidity management, rather than speculative trading. This trend shows that stablecoins are becoming a practical bridge connecting the crypto world with traditional finance. For users seeking to participate in prediction markets while avoiding crypto price volatility, native USDC offers an ideal neutral settlement layer. It retains the speed and transparency of blockchain transactions while providing the value stability of traditional USD.

Polymarket’s shift to native USDC settlement is not only a technical upgrade but also a key step in the evolution of stablecoins from a trading tool to a foundational element of professional financial infrastructure. When Circle introduces compliant USD stablecoins into prediction markets with annual trading volume of $22 billion, it is effectively building a new layer of financial applications. The stablecoin transaction landscape is rapidly expanding—from approximately $33 trillion on-chain transactions in 2025 to the upcoming issuance of the first compliant licenses in Hong Kong. Each step is pushing previously marginal experiments into mainstream finance. Gate’s market data shows that cryptocurrency market volatility has never ceased; Bitcoin seeks a new balance near $64,877.1. Meanwhile, the value anchor of stablecoins is quietly reshaping global prediction markets, cross-border payments, and the entire digital financial settlement infrastructure amid these fluctuations.