The cryptocurrency world is buzzing with major developments. Following Hong Kong's announcement of a港元 stablecoin issuance, the first IPO from a stablecoin issuer is on the horizon.
Circle Internet Financial, Ltd., the issuer of USDC (USD Coin), the world's second-largest stablecoin, is set to go public on the New York Stock Exchange. Market speculation points to a listing date around June 5 or 6.
Compared to Tether, the issuer of the largest stablecoin USDT, Circle's biggest advantage is its compliance and transparency. With the U.S. GENIUS Act now in effect, the volume of compliant stablecoins is expected to grow significantly. Circle aims to capitalize on its first-mover advantage. Currently, USDC's circulation exceeds $61 billion, while USDT's is approximately $150 billion. However, last year, USDC's volume grew by 40%, far outpacing USDT's 10% growth. Circle's current profit model is relatively straightforward: it earns interest on reserves.
What are Circle's prospects? Which investors might benefit? How will compliant stablecoins like USDC reshape the cryptocurrency landscape?
Understanding Circle's IPO Timing
Founded in 2013, Circle is a U.S.-based fintech company with USDC as its core product. Industry experts believe the company has chosen an opportune time for its IPO.
Recent developments include the passage of the U.S. GENIUS Act and the Hong Kong Legislative Council's approval of the Stablecoin Ordinance Bill. Additionally, crypto assets like Bitcoin have rebounded after a sharp decline in previous months.
However, it is understood that the primary purpose of this IPO is to provide an exit for existing shareholders and allow employees to cash out, with actual fundraising being a secondary concern.
According to current information, Circle and some existing shareholders plan to raise up to $896 million in the IPO. The company expects to issue 32 million shares, priced between $27 and $28 per share. This is a significant increase from the previously disclosed plan of 24 million shares at $24 to $26 per share, which would have raised $624 million. Major underwriters for the offering include J.P. Morgan, Citigroup, and Goldman Sachs.
Circle previously attempted to go public in 2021 via a SPAC merger at a $9 billion valuation but failed due to regulatory issues and market volatility. This is its second attempt. Although the valuation has been adjusted downward, Circle's scale has grown substantially. At the end of 2021, USDC's circulation was $42.5 billion; as of late May 2025, it exceeds $61 billion, with a remarkable growth rate of 40% over the past year.
This rapid growth is largely attributed to a key partnership with Coinbase, the world's largest compliant cryptocurrency exchange. In 2018, Circle and Coinbase formed the CENTRE consortium to launch USDC. Earlier, Circle's vision was to build a "next-generation payment network," akin to a "Bitcoin version of PayPal," offering low-cost, fast P2P payments and digital asset trading services. However, it later pivoted, discontinuing Circle Pay to focus exclusively on the stablecoin USDC, while Coinbase listed USDC for user trading.
The crypto market has recently begun to recover after setbacks in stocks and Bitcoin due to geopolitical tensions. As of the 4th, Bitcoin's price rebounded to approximately $105,755, up about 0.47% from the previous trading session. On May 22, Bitcoin reached an all-time high of $112,000.
Assessing the Investment Value of Compliant Stablecoins
One of the most pressing questions for investors is: what is Circle's investment value?
Driven by anticipation of Circle's IPO, stocks related to stablecoins have surged. China Everbright Limited (00165.HK), which jointly invested in Circle with IDG Capital in 2016, saw its stock price soar 26.6% on June 3, closing up 15.5% at HK$5.43 per share.
From a fundamental perspective, Circle reported a net profit of approximately $268 million in 2023 and $156 million in 2024. Its profit model is simple: it "earns interest." Each issued USDC is backed by $1 in fiat currency reserves. Circle holds these reserves in secure, short-term assets, such as U.S. bank deposits and short-term U.S. Treasury funds managed by BlackRock. In a high-interest-rate environment, this generates substantial interest income. According to the prospectus, Circle's total revenue in 2024 was about $1.676 billion, with 99% (approximately $1.661 billion) coming from interest income generated by USDC reserves.
Thus, besides transaction volume (the total funds flowing into USDC), Circle's profits are highly correlated with short-term U.S. dollar interest rates. In fact, the past two years have been a period of concentrated profitability for the company. In contrast, 2019 saw a net loss of approximately $179 million, mainly due to a one-time loss from the sale of its exchange, Poloniex.
Circle's ability to pursue an IPO is not only due to investor exit demands but also because, as a compliant stablecoin issuer, it meets the qualifications for going public. In contrast, Tether, the issuer of the largest stablecoin USDT, cannot IPO due to opacity and non-compliance issues.
Tether has long been criticized for the lack of transparency in its reserve assets, only beginning to release "attestation reports" in recent years. However, these are not full audit reports. Furthermore, Tether's reserve asset structure is non-compliant. The company has admitted that USDT is not fully backed by U.S. dollar cash; it has at times used commercial paper, crypto assets, and even "loans to affiliated parties" as reserves. These assets are highly volatile and lack transparency, making it difficult to pass the trust assessment of the U.S. securities regulatory system.
Tether also has serious historical compliance issues. In 2021, the company and Bitfinex were fined $18.5 million by the New York Attorney General for concealing $850 million in losses. Regulatory bodies in multiple countries (including the U.S., U.K., Canada, and Singapore) have consistently raised concerns about USDT's compliant use. If it were to apply for an IPO, these historical records would face thorough investigation, potentially affecting Tether's valuation or listing approval.
The Power of Network Effects
Some argue that with the GENIUS Act in place, theoretically, all new stablecoins will have the same compliant qualifications, leaving Circle with only a first-mover advantage.
However, industry insiders believe network effects are the key. For similar stablecoin products (with the same currency peg and redemption fees), the first-mover advantage is indeed the greatest advantage. A stablecoin with a first-mover advantage can quickly fill a market void, forming network effects and user stickiness. Subsequently entering stablecoins find it harder to attract customers.
The most typical example is Tether's USDT, launched in 2014. Despite its opaque asset reserves and high redemption fees, it still holds a market advantage and larger scale compared to USDC, launched in 2018, primarily due to network effects.
USDC is the largest compliant stablecoin. Due to network effects, newly issued compliant stablecoins are at a disadvantage. Additionally, the type of currency a stablecoin is pegged to is a critical factor in determining its scale. USDC is a dollar-pegged stablecoin, and the U.S. dollar remains the world's most important reserve currency, giving USDC strong competitiveness compared to stablecoins pegged to other currencies.
Industry experts also note that Circle faces certain challenges. For instance, the profitability of the stablecoin business is closely tied to scale. USDC's market share has dropped from 35% in early 2022 to less than 20% currently, while USDT's share exceeds 70%. Reasons include Circle's strict compliance, which restricts usage in some regions (e.g., sanctioned countries), and occasional on-chain de-pegging events, such as briefly falling to $0.88 during the Silicon Valley Bank (SVB) crisis.
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Reshaping the Cryptocurrency Landscape
The deeper implication behind Circle's IPO is that stablecoins could reshape the cryptocurrency landscape and, more importantly, the global monetary system.
Compliant stablecoins will serve as a crucial bridge connecting traditional financial markets and the cryptocurrency market. They will further reduce the cost for traditional capital to enter the crypto space,推动ing the industry toward mainstream adoption.
In terms of reshaping the global monetary system, this can be divided into two aspects: First, it will reshape the current cross-border payment landscape based on correspondent banking and clearing relationships. The current international清算 system relies on banks distributed across various regions and time zones as the front end, with backend systems comprising major national cross-border清算 systems for local currencies (e.g., the U.S.'s CHIPS for dollar清算) and shared international telecommunications systems (e.g., SWIFT). Cross-border payments depend on bank accounts. However, the emergence and promotion of compliant stablecoins will enable cross-border payments to脱离 the bank account system. Users can complete cross-border payments on blockchain networks based on a Token wallet paradigm, offering advantages in processing cycles and cost efficiency.
Second, it will further推动 the internationalization of the pegged currency. Compared to other electronic money, stablecoins are more inclusive and network-driven due to their inherent nature. Stablecoins are essentially the digitization of M0 (like cash), whereas other electronic money is often the digitization of M1 or M2 (like bank deposits).
The characteristics of M0 are reflected in two aspects (just like cash): transaction freedom and transaction anonymity. Based on these two features, stablecoins are更容易 promoted and used globally. Just like current USDT and USDC, anyone in the world can hold stablecoins and transfer them to unknown third parties at any time and place, requiring only an internet connection and no support from financial infrastructure.
With the Hong Kong government accelerating the promotion of a港元 stablecoin, various sectors expect more institutions may apply for licenses. JD.com has announced it will issue a stablecoin in Hong Kong based on public blockchain and pegged 1:1 to the Hong Kong dollar. It is believed that JD.com has entered the Hong Kong Monetary Authority's stablecoin sandbox for testing. Its intention to apply for a Hong Kong stablecoin license in the future is a certainty, but applying for and obtaining a license are two different things. As a major domestic internet giant, JD.com's e-commerce payment scenarios and prior technical积累 naturally align with stablecoins, giving it significant advantages in practical application and落地.
The industry also recognizes that while stablecoins will promote the penetration of the pegged currency at the microeconomic level, they also bring challenges related to anti-money laundering (AML) and countering the financing of terrorism (CFT), which will test financial regulators in the future.
Frequently Asked Questions
What is a stablecoin?
A stablecoin is a type of cryptocurrency designed to maintain a stable value, typically by being pegged to a reserve asset like the U.S. dollar or gold. This stability makes them suitable for transactions and as a store of value within the volatile crypto market.
How does Circle make money?
Circle's primary revenue source is the interest earned on the reserves backing USDC. These reserves are held in low-risk, short-term assets like U.S. Treasury bills and bank deposits. The interest income generated forms the bulk of the company's profits.
Why is USDC considered more compliant than USDT?
USDC is issued by a regulated financial company that undergoes regular audits and provides transparent reports on its reserves. In contrast, USDT's issuer, Tether, has faced criticism for lack of transparency and past compliance issues, making USDC the preferred choice for regulated entities.
What are the risks of investing in stablecoin-related stocks?
Investment risks include regulatory changes, interest rate fluctuations affecting profitability, competition from other stablecoins, and potential technological issues like de-pegging events. The market is also influenced by broader crypto asset volatility.
How might stablecoins impact traditional banking?
Stablecoins could disrupt traditional banking by offering faster, cheaper cross-border payments and financial services that operate outside the conventional banking system. This may force banks to innovate and adapt to new technological paradigms.
What is the future of stablecoin regulation?
Regulation is expected to intensify globally to address concerns like AML and CFT. Frameworks like the U.S. GENIUS Act and Hong Kong's Stablecoin Ordinance Bill are early examples, aiming to create a safer environment for stablecoin adoption while ensuring financial stability.