Fantastic
2025.06.05 06:47

Here's a deep dive into Circle (CRCL), the "first stablecoin stock"

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I. Company Background and Core Business

Founding and Development History Circle was founded in 2013 by Jeremy Allaire and Sean Neville, initially positioned as the "U.S. version of Alipay," offering Bitcoin payments and cross-border transfer services. In 2018, it partnered with Coinbase to launch the USD stablecoin USDC, gradually transitioning into a crypto financial infrastructure service provider. As of June 5, 2025, USDC's circulating market capitalization has reached $61 billion, accounting for 29% of the global stablecoin market, second only to USDT.

Core Products and Business Model

  • USDC Stablecoin: Pegged 1:1 to the US dollar, with reserve assets consisting of 80% short-term US Treasury bills and 20% cash, held by BNY Mellon and BlackRock. It boasts high transparency.
  • Revenue Streams:
    • Reserve Asset Interest (75%): Income from Treasury bills and cash management, with interest income reaching $558 million in 2024.
    • B2B Service Fees (20%): Fees for institutional issuance/redemption, API interface services, etc.
    • DeFi and RWA: USDC serves as on-chain collateral and a liquidity vehicle for tokenized assets (e.g., Treasury bills, real estate).

II. IPO Process and Market Reaction

Key Listing Information

  • Timing and Scale: Listed on the New York Stock Exchange (NYSE) on June 5, 2025, under the ticker CRCL, with an offering price of $31 per share. It raised $1.1 billion, reaching a market capitalization of $6.9 billion (fully diluted to $8.1 billion).
  • Subscription Status: Oversubscribed by major investors including BlackRock (10% stake) and Cathie Wood's ARK Invest fund ($150 million), with demand exceeding the offering by 25 times.

Significance in Capital Markets

  • Mainstreaming Crypto Finance: The first stablecoin IPO signifies traditional finance's recognition of crypto assets, accelerating institutional adoption.
  • Valuation Comparison: Price-to-sales (P/S) ratio of 4.3 (based on 2024 revenue of $1.676 billion), lower than Coinbase (9x), reflecting the market's balance between its growth potential and risks.

III. Competitive Advantages and Industry Position

Compliance and Transparency Advantages

  • The first stablecoin issuer in the US to obtain a BitLicense, regularly disclosing reserve audit reports, and complying with regulatory requirements such as EU MiCA and Hong Kong's "Stablecoin Regulations."
  • Collaborating with the Federal Reserve to pilot a money market fund license, exploring digital dollar infrastructure.

Market Position and Ecosystem Layout

  • USDC Ecosystem: Supports multi-chain issuance on Ethereum, Solana, and others, integrated with Visa payment networks, accounting for 30% of DeFi stablecoin trading volume.
  • Institutional Partnerships: Provides liquidity to exchanges like Coinbase and Binance, and is advancing cross-border payment projects with Standard Chartered Bank and other institutions.

IV. Risks and Challenges

Regulatory Uncertainty

  • The US "Digital Stablecoin Act" (GENIUS Act) requires 100% highly liquid asset reserves, which could increase operational costs; global regulatory disparities may lead to compliance conflicts.

Interest Rate and Liquidity Risks

  • Revenue is highly dependent on US Treasury rates; if interest rates decline (e.g., due to Federal Reserve rate cuts), interest income will be pressured.
  • The 2023 Silicon Valley Bank crisis caused a temporary de-pegging of USDC, exposing its dependence on traditional financial systems.

Increased Market Competition

  • USDT still dominates the market with a 61% share; new players like Ripple are accelerating their entry, requiring USDC to continuously innovate to maintain its advantage.

V. Future Outlook

Strategic Direction

  • RWA Tokenization: Collaborating with BlackRock to launch the tokenized Treasury bill USYC, expanding reserve asset types.
  • Cross-border Payments: Utilizing USDC's low-cost nature to partner with financial institutions in Hong Kong, Singapore, and other regions to promote the internationalization of the digital dollar.

Industry Impact

  • Driving Stablecoin Legislation: Circle's listing may accelerate legislative processes in the US, Hong Kong, and other regions, clarifying stablecoin regulatory frameworks.
  • Crypto Market Recovery: As the second-largest stablecoin by market capitalization, increased USDC liquidity could drive a rebound in the DeFi, NFT, and other ecosystems.

Summary Circle's IPO is a milestone event for crypto finance, setting a benchmark for the industry with its compliant model and stablecoin ecosystem. However, interest rate fluctuations, regulatory challenges, and market competition remain long-term hurdles. If it successfully integrates traditional financial resources and maintains technological leadership, Circle is well-positioned to play a pivotal role in the digital dollar competition.$Trump Media & Tech(DJT.US) $Coinbase(COIN.US) $NVIDIA(NVDA.US) $Apple(AAPL.US) $Tesla(TSLA.US)

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