Minting vs Buying on the Secondary Market: Where the Peg Is Set

Two markets, one ticker

A stablecoin is usually described by its target, not by its plumbing. The plumbing matters because the same token is sold in two places with different rules. In the primary market you deal with the issuer, which creates or destroys tokens against fiat at par. In the secondary market you deal with another holder, through a venue, at whatever price clears.

The Treasury-led President’s Working Group report on stablecoins describes the first side plainly: stablecoins are generally created, or minted, in exchange for fiat currency that an issuer receives from a user or third party, and many offer a promise or expectation that the coin can be redeemed at par on request. That promise is the anchor. It is not the price.

Primary issuance is a wholesale door

Issuers do not run a retail counter. Circle states that Circle Mint is for institutional customers and is not available to individuals, who are directed to the secondary market through providers. The onboarding gate — background, KYC and sanctions screening, and the registered-distributor requirement — is set out in our guide to USDC redemption through Circle Mint. What matters for the peg is the contractual condition underneath it.

The legal side is just as specific. Circle’s USDC Terms commit Circle to redeem 1 USDC for 1 USD, subject to the terms, applicable law and any applicable fees. The same document makes the route conditional: a holder must be eligible to register a Circle Mint account, and a holder who is not eligible, or does not register, is not entitled to redeem with Circle.

Tether’s published schedule shows the same wholesale shape in numbers. New tokens are issued only when requested and purchased by customers who have completed its verification procedure. The fee page lists a minimum acquisition or redemption amount of 100,000 USD₮, an acquisition fee of 0.1%, a redemption fee of the greater of $1,000 or 0.1%, and a non-refundable verification fee of 150 USD₮.

That floor does quiet work. At exactly the 100,000 USD₮ minimum, 0.1% is $100, but the greater-of rule charges $1,000, which is 1% of the redeemed amount. The fee only falls to 0.1% once the redemption is large enough for the percentage to exceed the fixed floor — at $1,000,000.

The secondary market is a price, not a promise

On a venue, the token is an order book. Price is set by the buyers and sellers present, the depth at each level and the fees charged to cross the spread. There is no eligibility test beyond opening an account, no issuer minimum, and settlement is a trade rather than a bank transfer.

The trade-off is that nothing on the venue is obliged to give you a dollar. You receive the market price, which is normally close to par because the issuer’s redemption window exists, and which is not guaranteed to be par because your access to that window may not exist at all.

How arbitrage connects the two

The link is a trade, repeated by firms large enough to make the fixed costs irrelevant:

• Below par. Buy tokens on a venue at $0.998, redeem them with the issuer at $1.00, and keep the difference. Every purchase of that kind adds bid to the venue and pulls the market price up toward par.
• Above par. Mint tokens with the issuer at $1.00, sell them on the venue at $1.002, and keep the difference. That adds supply and pushes the market price down toward par.

The important word is band, not point. Each leg has a cost: the issuer’s fee, the venue’s fee, the spread paid to cross, the interest lost while funds sit in transit, and the risk that the redemption takes longer than planned or does not happen. Arbitrage is profitable only when the deviation exceeds the sum of those costs. The peg is therefore held to within an amount that is roughly the cost of correcting it, not to the last decimal place.

This is why two stablecoins with identical targets can trade at different small deviations on the same day. Their redemption terms, minimum sizes, banking rails and venue liquidity are not identical, so the cost of the correcting trade is not identical either.

Why a small premium or discount persists

Several frictions can hold a price away from par for longer than a chart suggests:

Redemption is closed to most holders. A retail holder below the issuer minimum cannot execute the correcting trade. Their only exit is to sell, and their selling can push the market below par without summoning the redemption bid that would fix it.

The correction takes time and capital. Wiring funds, waiting for settlement and holding a position through the weekend all cost money. The wider or slower the rail, the wider the band.

Redemption can be delayed or suspended. The Treasury-led report notes that redemption rights differ in who may present a token and in the limits on quantity, and that some issuers may postpone redemption payments or suspend redemptions. A right that can be paused is worth less than a right that cannot, and the market prices that difference during stress.

Order flow can be one-sided on one venue. Demand for a token as collateral, or a large forced seller on a single exchange, moves that venue’s price even when the issuer’s window is open elsewhere.

Liquidity is finite. In a thin book, a modest order moves the price. That is a liquidity effect, not a statement about the issuer’s balance sheet.

What this means if the primary door is closed

For most holders, the secondary market is not a fallback. It is the entire market. That has two consequences worth internalizing.

First, the price you can actually get is the venue price after fees, not the redemption promise. A stablecoin quoted at $0.9995 on a venue that charges 0.1% to trade is, for you, a $0.9985 exit.

Second, the issuer’s terms decide whether the arbitrage that supports the peg is available to anyone at all. When reading a depeg, the useful question is not only how far the price moved but who could still redeem and at what size. Our guide to reading a depeg off the price chart covers the chart side; this distinction between the two markets is what the chart cannot show.

Checking your own route

The practical questions are short:

1. Can I redeem directly? Confirm the entity, the jurisdiction, the account type and the verification requirement in the issuer’s terms.
2. What does it cost at my size? A fixed fee floor can dominate the percentage. Calculate the fee in dollars, not in basis points.
3. How long does it take? Days in transit are days of price exposure and lost interest.
4. What does the venue charge? Trading fee plus spread plus any deposit or withdrawal fee.
5. What if redemption is suspended? That scenario, not the calm one, is what the secondary price is really pricing.

Our guide to redemption and network compatibility goes deeper on the operational side of the primary route.

Risk note. This is an explanation of how issuance and secondary trading interact, not advice on which token to hold or where to trade. Issuer terms, minimum amounts, fees and supported jurisdictions change without notice. A stablecoin is a promise by a private company, not a bank deposit and not a central-bank liability; it can trade away from one dollar, redemption can be restricted or suspended, and the assets behind it can lose value. Figures quoted here are as published by the issuers on the retrieval date and should be re-checked at the source.