Shares of Circle Internet Group, the issuer of USDC stablecoin, skyrocketed 168% during its first day on the New York Stock Exchange. Priced at $31 per share, the IPO raised $1.1 billion—upsizing both share count and price amid heavy demand. Trading briefly halted three times for volatility as the stock peaked near $104, ultimately closing at $83.23. That valuation puts Circle’s fully diluted market cap at nearly $22 billion.
Circle’s IPO ranks among the year’s largest U.S. IPOs and has fed broader optimism for public listings. Other high-profile tech and fintech names like Chime and Klarna are now being cited as potential beneficiaries.
Support from Shifting Policy Winds
Circle’s debut comes amid a renewed push in Washington towards lighter crypto regulation, partly driven by former President Trump’s policy pronouncements. His administration signalled intent to position the U.S. as “the crypto capital of the planet,” with stablecoin regulation expected to expand significantly.
Draft rules could increase global stablecoin assets from roughly $250 billion today to as much as $2 trillion, directly benefiting issuers like Circle.
Circle’s Financial Performance and Network Strength
Circle reports $61 billion of USDC in circulation, second only to Tether. It earned $1.66 billion last year from interest on U.S. Treasuries backing USDC, a return boosted by Fed policy keeping rates above 5%. But a substantial portion—around 60%—went to fees and transaction costs paid to distribution partners such as Coinbase.
Circle CEO Jeremy Allaire emphasised the company’s “scale and network,” its global regulatory licences, and its ability to compete with established financial firms.
Resilience Under Pressure
Circle weathered the 2023 collapse of Silicon Valley Bank, which held $3.3 billion of its reserves, and saw USDC briefly lose its $1 peg. Regulators eventually moved to guarantee SVB deposits, restoring stability.
Its IPO attempt in 2021 via SPAC, backed by ex-Barclays chief Bob Diamond, collapsed. That deal valued Circle at $7–9 billion—significantly less than its current market valuation.
What This Means
Circle’s stock-market debut tells a broader story: stablecoins and crypto firms are entering mainstream finance, supported by policy and investor enthusiasm. With USDC in wide use, especially for cross-border payments and trading, Circle is riding a wave of demand.
Still, their business is heavily tied to interest rates and partner-driven economics—over 60% of revenue pays out in distribution costs. That model lacks defensible moats, leaving Circle exposed to competition from banks and fintech firms that could replicate stablecoin offerings.
My View: Circle’s debut is a welcome sign for crypto’s integration into traditional markets. But success won’t be automatic. The firm must diversify its revenue drivers, solidify profit margins, and strengthen its position versus competitors.
If it can harness its regulatory standing and network effects, Circle may help usher in a new era of digital finance. If not, it risks becoming a high-cost vehicle squeezed by more efficient incumbents.
