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Circle Files for IPO as Crypto Firms Eye Wall Street
Initial Public Offering | April 3, 2025
Image: Freepik/rawpixel.com
Circle’s IPO Test Pure Stablecoin Model on Public Markets
The company behind the USDC stablecoin, Circle, has filed to go public on the New York Stock Exchange under the ticker CRCL, looking to raise capital in public markets at a valuation between $7 billion and $12 billion, according to Lex Sokolin’s breakdown.
In 2024, Circle reported $1.66 billion in revenue and $156 million in net income, with details confirmed in its S-1 filing and reviewed by Financial Times. Mostly all of its revenue is earned interest on USDC reserves that is held in safe money market funds managed by BlackRock.
Fortune reports that Circle's IPO is expected to be late April.
Circle Has a Low Risk Model But Rising Costs
This is a low risk, high compliance model which aims to keep all USDC reserves fully backed and avoids higher risk strategies. Its approach has earned credibility with regulators and institutional partners but with lower risks comes tighter margins.
See: Stablecoins Are Growing Faster Than You Think
Last year, Circle paid almost a $1 billion in fees and incentives to distribution partners like Coinbase that help drive adoption. As Sokolin points out in his analysis, these distribution costs are rising fast and now Circle's profitability is under pressure. So despite solid revenue growth, the company is making less profit, not more.
Competitor Tether Is Earning Way More by Taking Risks
These profits were primarily derived from investments in assets like U.S. Treasury bonds, Bitcoin, and gold. This figure places Tether's profitability on par with major financial institutions such as Goldman Sachs. By comparison the revenue gap between Circle and its main rival, Tether (USDT) is wide. Tether generated $13 billion in profit last year by taking on more risk and investing in assets like U.S. Treasury bonds, Bitcoin, and gold.
Pro-Crypto Politics but Trade War Creates Uncertainty
President Trump previously said he wants to make the U.S. “the crypto capital of the planet" and has issued a flurry of pro-crypto executive orders since taking office, such as the U.S. establishing a strategic Bitcoin reserve, and digital asset stockpile. Also, the SEC has slowed down it's regulation by enforcement campaign and is moving to establish a comprehensive framework to regulate stablecoins and digital assets.
So the political environment has opened the IPO window for crypto firms like Circle and crypto exchange Kraken (Payward Inc planning IPO for 2026). However, not all of Trump's policies are benefiting the crypto economy. The broad sweeping universal and country-specific tariffs announced April 2, 2025 for example, of applying import taxes for all goods entering U.S. markets as high as 60% for some countries, have sparked concerns about inflation, trade retaliation, shifting supply chains, and slower global growth, hurting investor confidence.
See: Circle Becomes First Stablecoin to Meet Canadian VRCA Rules
For a company like Circle that depends on interest income for it's revenue, a volatile economic environment poses real risks. Circle has exited its other businesses and is a pure stablecoin operator that is banking on the integrate of its USDC stablecoin into the global financial system and digital commerce markets.
Why It Matters
Since Circle doesn't lend, doesn't diversify, doesn't offer other financial services, it's a pure stablecoin play so it'll be interesting to see how much capital it raises during it's IPO in the current climate. That is, it's a real time case study to see if a low risk, transparent and crypto-native company model can succeed on public markets, especially as it faces rising costs, strong competition, and uncertain global headwinds.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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