Circle’s IPO validates stablecoins

What happened

Circle Internet Group, the issuer behind the USDC stablecoin, debuted on the New York Stock Exchange on Thursday, 5 June 2025. Priced at $31 per share for a valuation of ~$7bn (above the expected range), the stock quadrupled after three trading sessions. It currently trades at ~$28bn. The IPO raised over $1 billion and marked the first listing of a U.S.-regulated, stablecoin-native company on a major exchange.

Impact on our Investment Case

The market saw the future

The IPO is thought to have been oversubscribed, with a demand at 25-30 times the offering. This created a lot of frustration for institutional asset managers who only received a fraction of the shares they had requested. With only 11% of fully diluted shares offered, scarcity collided with pent-up crypto demand, producing one of the most dramatic listing pops in recent fintech memory.

This overwhelming demand for Circle shares should be read as a signal: markets are starting to grasp the long-term potential of stablecoin infrastructure. As we’ve argued before, stablecoins are not just crypto assets. They are programmable dollars embedded in real-time financial rails.

The company effectively runs a digital shadow bank with almost all its revenues derived from reserve yield on U.S. Treasuries backing USDC. But the key differentiator is programmability: Circle is building the financial equivalent of “HTTP for money.” The IPO formally marks this transition from backend operator to internet-scale platform.

Wall Street, however, mispriced this paradigm. The IPO was anchored to outdated SPAC valuations: In 2022, Circle was expected to go public through a reverse SPAC combination at a valuation of $9bn. Such a valuation came from a different sentiment regime.

Reopening of the crypto IPO window

Circle’s decision to list now is a direct play on pending U.S. stablecoin legislation. These would codify 1:1 backing requirements, mandate U.S.-based issuance licenses, and grant legal clarity to payment stablecoins. In short, they would make Circle’s compliance-first approach the industry baseline while challenging Tether's offshore dominance of USDT.

This moment also marks the reopening of the fintech/blockchain IPO window. With institutional sentiment warming and regulatory risk trending low under the Trump administration, we expect others to follow (e.g., Gemini, Consensys, and Ripple).

Understanding the current valuation

Circle’s business model is straightforward. It issues stablecoins and generates revenue from government bonds with the reserves that back its stablecoins (i.e., “Reserve income” in the following table).

At the current valuation, Circle now trades more like a growth fintech than a cash-flow annuity. Here’s what needs to happen to support that, especially if we consider the likely Fed rate cuts:

• USDC scale. The higher the circulating supply of USDC, the higher the reserve revenue. The reserves need to more than double, by (1) gaining market share over competition and (2) leveraging increased adoption of stablecoins.
• Revenue diversification. Circle expects non-interest revenue to reach ~10% of the total revenue in 2026. New business lines include the Circle Payment Network (cross-border B2B payments), programmable wallets-as-a-service (developer toolkit abstracting blockchain complexity), tokenized fund infrastructure (it already owns USYC, a tokenized money-market fund), and cross-chain transfer protocol (seamless USDC transfer).
• Distribution economics. Circle paid $1bn in 2024 to distribute USDC. In its 2024 statements, Coinbase Global Inc actually disclosed $910mn from this collaboration. Reducing this dependency, e.g., through new deals with Binance and other partners, is essential for margin expansion.

Circle’s S-1 emphasizes its ambition to build a “platform and network utility” similar to Internet protocol layers. In this sense, the IPO marks the start of a new business model – not the peak of the old one.

Ripple effects: Coinbase, Tether, and the new stablecoin narrative

The most immediate beneficiary is Coinbase. It co-founded USDC and holds Circle’s shares worth ~$1bn. With Circle public, Coinbase’s lobbying position is materially strengthened, and USDC’s growth translates directly into recurring, high-margin cash flows for Coinbase. As we explored here, this reinforces Coinbase’s case as a “picks-and-shovels” play for crypto infrastructure.

Tether, by contrast, faces growing pressure. The S-1 notes that Circle’s reserves are held in BlackRock-managed funds, with daily disclosures and U.S. regulatory oversight. If U.S. law mandates onshore, audited, fully backed stablecoins, USDT risks losing access to institutional demand. In the worst scenario, this could trigger a bank run on USDT, which would have impact on the whole blockchain industry. To be transparent, it is not the first time that we have mentioned the potential risks of USDT (here, here, or here). However, the upcoming launch of Twenty One (a Bitcoin treasury company) with Softbank and Cantor Fitzergarld (with close ties to the current U.S. administration) may help round the corners with the regulators. In the meantime, USDT remains by far the largest stablecoin in circulation.

The following chart shows the evolution of USDT and USDC, which account for >90% of the stablecoin market.

We also note growing interest among U.S. banks in launching their own stablecoins, which could emerge as credible competition to both Circle and Tether. While Circle has a first-mover advantage, this risk must be priced in.

Our Takeaway

We’ve followed Circle for years and always believed it could play a foundational role in blockchain-based finance. The success of its IPO is less surprising than the sheer scale of the market’s re-rating in the first trading days.

What changed is not just Circle’s status as a public company. It’s the market’s recognition that stablecoins are not side-shows, but base-layer infrastructure.

As a pure-play, Circle has now entered our investable universe. But valuation matters: Circle at $7bn was priced as a yield vehicle; Circle at $28bn is priced for platform-scale growth. That requires execution across product, regulation, and distribution.

For now, we’re running updated scenarios on future float, fee revenue, and non-interest margin. Depending on how these unfold, we may add the name in upcoming portfolio reviews. Either way, the signal is clear: blockchain infrastructure just got its IPO moment, and it won’t be the last.