Circle Internet Group IPO: A Bet On Fiat Survival Through Stablecoins

Summary Circle Internet Group, the issuer of USDC stablecoin, is set to go public on June 5th after a previous failed SPAC attempt. USDC holds 26% of the fiat-collateralized stablecoin market, trailing Tether, but leads in transaction volume with a 58% share in May. Circle Internet’s business model profits from minting USDC backed by cash and T-bills, making treasury yields critical to its financial performance. CRCL IPO valuation is more modest than previous attempts, but still potentially high given the risks to the business and the valuation of peers. One of the ‘crypto companies’ that has long been expected to enter the public equity markets is set to begin trading on June 5th with the IPO of Circle Internet Group ( CRCL ). Circle Internet is the issuer of the stablecoin USDC ( USDC-USD ). The company attempted to go public via the SPAC merger with Concord Acquisition Corp (CND) back in 2021, but the parties mutually agreed to terminate the planned combination after the US Securities and Exchange Commission did not declare the S-4 registration as effective before the deadline to do so. In this article, we’ll look at what Circle does, the company’s share of the market, financials, and what IPO investors might be able to expect in the early trading of CRCL shares. Stablecoins & Circle Internet’s Share of Market The concept of the ‘stablecoin’ cryptocurrency is to be a blockchain-based unit of account that preserves the value of investor/speculator capital within the cryptocurrency ecosystem. During times of high volatility, traders can swap out of the more volatile assets like Ethereum ( ETH-USD ) or other altcoins and into tokens that are viewed as more stable. These tokens have historically been designed to mimic the value of the US Dollar, but other fiat currencies are also represented in the stablecoin market as well. In addition to providing a margin of safety to traders in a volatile market, stablecoins have increasingly become used for low-cost, cross-border payments. Where users of FinTech platforms like Venmo ( PYPL ) or Cash App ( XYZ ) can send dollars to each other within their own walled garden platforms, stablecoins and the networks where they live, potentially serve as insurgents to Venmo, PayPal, Cash App, and even Zelle in a world where more commerce happens ‘on-chain.’ Stablecoin tokens that trade for $1 may look or behave the same, but they can have completely different constructions. Most of them generally fall into these three buckets: Fiat-collateralized – backed by real dollars with a centralized issuer Crypto-collateralized – backed by an over-collateralized pool of other cryptocurrencies Algorithmic – backed by an over-collateralized dual token minting/burning system The overwhelming majority of stablecoins are of the fiat-collateralized variety. This is the category where USDC falls. Within that category, USDC commands a solid second-place position with 26% of the stable market share. Stablecoin Market Share (IntoTheBlock) At roughly $61 billion in early June, USDC is well behind market leader Tether ( USDT-USD ) in terms of circulating coin supply. Tether comes in at $153 billion—more than double that of USDC. For what it’s worth, USDT has been growing faster than USDC. Despite growing supply by 11% from the July 2022 high of $55 billion, USDC supply growth since that period has been dwarfed by that of USDT. Resulting in a 29% decrease in market share for USDC from 36.8% three years ago when Circle last tried to go public via SPAC. However, it isn’t all bad news for Circle’s flagship product: Stablecoin transaction volume share (Artemis) Artemis shows USDC with a 58% share of transaction volume during the month of May—far more than the 35% share of volume for USDT. The nominal figures here are important as well. At a 30-day rolling average of $2.3 trillion in stablecoin transfer volume, an analysis by Nic Carter of Castle Island Ventures has stablecoin usage already competing with more established payment processors like Visa ( V ). It is worth mentioning that Circle’s USDC token is backed by cash reserves and short-term T-bills. The company regularly updates circulation, reserve, and net issuance/redemption numbers through its website: Fiat Backing, 5/29/25 (Circle) Over the last year, USDC has experienced $28.8 billion in net issuance—this would be essentially the same thing as coin supply growth. While the share of token transfer volume is strong, ultimately it is growth in coin supply that makes money for Circle. The company takes dollars, buys treasuries with them, and mints USDC tokens on various blockchains like Solana ( SOL-USD ), Ethereum, and Base ( COIN ) on a 1:1 basis. Thus, under Circle’s current business structure, the yield from those t-bills is of considerable importance. Circle Internet Group Financials While 2024 was the second consecutive year the company achieved profitability, the company’s net income for the full year 2024 was down 42% from 2023. In Circle’s amended S-1 from May, the company reported a far more encouraging start to 2025. Reserve income came in at just under $558 million for the three months ended March. This was a 55% year-over-year increase and outpaced total opex which grew by 30% over the quarter that ended March 2024: Circle Financial Performance (Circle Amended S-1) Distribution and transaction costs grew by 71.3%—which outpaced revenue in the quarter. The company spent more on compensation in the quarter—growing by 23.7% year over year. This was the largest nominal increase in opex though not the largest percentage change—that honor went to marketing. The company spent more on marketing expenses than it did in Q1-24 at $3.9 million, however, Circle’s annualized marketing spend so far in 2025 is below the total spend from 2024 and well below 2023 and 2022. Circle intends to spend roughly a third of the company’s capital raise on tax withholding and remittance obligations and would use what is left on working capital and corporate expenses. Of course, we can already deduce that Circle’s proceeds from the IPO will be greater than the original $298 million estimated in the amended S-1. CRCL Valuation and Share Price Expectations After initially pricing the failed SPAC at a $4.5 billion valuation in July 2021, Circle and Concord subsequently doubled Circle’s valuation to $9 billion in February 2022 prior to the deal falling apart. Back in April, Ripple reportedly offered to buy Circle at a price tag between $4 and 5 billion. That bid was rejected. Now, at a reported $31 dollars per share , the public market is set to welcome Circle as a company valued at closer to $6.9 billion after selling 34 million shares in a $1.1 billion raise. Circle Internet Group Share Count Prior to the $1.1 billion raise 187,434,661 Offered by company/stockholders 34,000,000 Shares following offering 221,434,661 Estimated market valuation $6,864,474,491 Source: Author’s estimate based on S-1 shares outstanding figures Glancing at the balance sheet at the end of March, actual stockholder equity after deducting liabilities from the company’s assets comes out to just $745 million: CRCL Balance Sheet (Circle, Amended S-1) At a $6.9 billion market capitalization, CRCL is set to IPO on June 5th at a 9.2 price to book multiple and a forward PE of about 25 when the company’s Q1-25 performance is annualized. Meaning, right out of the gate, CRCL will be priced more richly than both PYPL and XYZ—two companies that Circle figures to be competing with. That said, perhaps a true valuation of CRCL at this juncture is a bit challenging. In his founder letter at the beginning of Circle’s S-1 , CEO Jeremy Allaire makes the argument that Circle is not a company that can be put in a traditional box: Some may say we are like a payments company, others like a financial institution, and still others like a consumer internet or platform software company. The reality is that we’re a little bit like all of these kinds of companies. The company believes the real TAM for what Circle has to offer through stablecoins and its newly launched CPN — or Circle Payments Network — is the entire global monetary supply. Key Risks There are several risks to consider before buying the Circle IPO or even investing in CRCL shares further down the line. Number 1 : the company is primarily earning income through yield from t-bill reserves that back its flagship stablecoin token USDC. Thus, interest rate risk is significant. In an environment where interest rates decline, it will directly impact Circle’s bottom line. Number 2 : using stablecoins is still a rather cumbersome experience. While Circle’s Paymaster contract allows end users to move USDC across public blockchains while paying gas fees in the USDC token rather than the native token of those blockchains, taking P2P or B2C transaction share away from companies like Block Inc or PayPal remains a challenging task. Each of those companies is capable of competing with Circle directly in the blockchain payment market to a larger degree than they already do. For instance, PayPal has launched a competing stablecoin token and Block Inc. is involved in the Bitcoin ( BTC-USD ) ecosystem. Number 3 : Circle’s payment infrastructure and token solutions assume fiat currency will remain the dominant mechanism for global payments going forward. I’m much less convinced of that and I view the fact that 99% of the stablecoin market globally is dollar-pegged instruments as a rather large signal. The dollar is the ‘cleanest shirt in the dirty laundry’ as Santiago Capital’s Brent Johnson likes to say. My view is the very small supply of non-dollar stablecoins in the global market isn’t from a lack of effort from issuers, but rather, a lack of demand from the populace. Number 4 : regulatory risk remains an ongoing concern for Circle. The company issues tokens that can be utilized globally. As an entity that prides itself on regulatory compliance, it is at the mercy of constantly evolving governance across a wide range of jurisdictions. Investing in Circle carries interest rate risk, competition risk, fiat currency risk, as well as regulatory risk. Interest rates and regulations are likely to present the biggest hurdles in 2025. My personal view is the competition risk is likely the most important one to consider going forward. Circle has been in the market for years and is losing its share to its primary competitor. On a longer time frame, Circle is perhaps most exposed to disruption by the fiat currency issuers themselves. In an environment where central banks issue digital currencies more directly, Circle may find itself cut out of the distribution chain entirely. This is perhaps a larger risk outside of the United States, but still one that, I believe, should be considered domestically as well for US investors. Investor Takeaways I am of the view that there is a large total addressable market for asset tokenization. The lowest-hanging fruit in the tokenization game is fiat currency and the debt-based instruments that back those currencies. From there, settlement of additional securities like equity or corporate bonds would figure to be a logical next step from where I sit. Circle has already carved out a strong position in asset tokenization given its role as the issuer of the second largest US Dollar stablecoin and the largest non-Dollar stablecoin through its Euro-based offering Euro Coin (EURC-USD). At $31 per share and a nearly $7 billion market valuation, CRCL is certainly priced for growth based on the net income the company is currently generating. There is no shortage of long-term risks to consider in this name. But in the event of a correction in broader equity markets or in the stock itself, I think CRCL is one to consider adding on weakness for a speculative flier. I’m not personally planning to participate in IPO day trading.

Source: Seeking Alpha