Circle goes public and surges 750% in less than three weeks
Has the great age of stablecoins begun?
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The day Circle went public, the bell was sounded not just for one company, but for the entire stablecoin industry. Today stablecoins already account for roughly 1% of the total global money supply, of which Tether (USDT) and Circle (USDC) have a combined market share of more than 85%. Analysts say the stablecoin market will double in volume over the next 18 months and they put the long-term estimate at a staggering $2 trillion.
At the same time a regulatory breakthrough fired up Circle’s valuation. The GENIUS Act passed the US Senate with raving bi-partisan support. Once signed into law, the Act will create a clear legal framework, allowing both banks and non-banks to issue dollar-denominated digital assets, given that they are fully backed. Circle’s advantage is that its coin USDC is already registered and fully compliant with the rules laid out in the Act. The GENIUS Act will be a clear foundation for a regulated stablecoin market and cement the US’ pivotal role in tomorrow’s world of finance, a big departure from the previous chaos in crypto-regulation.
The great migration of crypto-profits
Something else is noteworthy about Circle’s surge. Obviously the outlook for the entire crypto-market has significantly brightened as the GENIUS Act passed the senate. Yet for the first time the major profits did not accrue in the crypto-market directly. Rather, they were realized via the traditional financial system. Not only did Circle’s shares skyrocket, so did other crypto-equities. The most notable was Coinbase, the number one crypto exchange and strategic Circle partner on USDC. Its share price stood at $254 on June 17, the day the Act was passed. Nine days later it was at $375.
It is a sign that crypto assets are increasingly integrated and intertwined with the traditional economy and financial system. This is good news for investors. There are many who would be eager to invest in the future of the crypto-space but they either don’t want to dabble in the very specific rules and risks of this world or they are simply not allowed to hold crypto assets. Public equities provide a much needed on-ramp into the crypto-realm. This also benefits those already holding crypto assets. More investors means higher investment volumes and thus prices going up.
This doesn’t mean, however, that the ICO, i.e. the crypto-version of the IPO, is dead. Also this June, another stablecoin raised a good deal of money in a way that reminded us of the 2018 ICO boom. $500M to be precise. Plasma, which is backed by the stablecoin giant Tether, is a distinct, new blockchain initiative with a direct focus on optimizing USDT movement. It slashes the costs of Tether transactions. Plasma raised all this money within minutes and without the overhead that accompanies an IPO. No regulatory filings, no underwriters, no roadshows. Just selling tokens to wallets. But of course, it also came with all the typical problems of an ICO. For example, many of the tokens were claimed by whales and bots.
It is likely that both these routes will continue into the future and perhaps there will also be a hybrid version at some point. But it is certainly welcomed that investors can also choose to invest into crypto assets and companies within the frame of a regulated and transparent financial system. And investors will have plenty of opportunity to do so still this year.
Getting in on upcoming crypto IPOs
Following Circle’s landmark IPO in June 2025, which saw its stock soar and market cap skyrocket, the crypto industry is experiencing a surge of interest in public listings. Several major crypto companies have announced or are rumored to be preparing IPOs for late 2025, with some targeting early 2026. The list also includes many heavyweights. Gemini, Bullish, Bithumb, Bitkub, FalconX, and BitGo are among the most likely to go public before year-end. Kraken, OKX, ConsenSys, Ledger, Fireblocks, and Chainalysis are also in the mix, with some targeting late 2025 and others likely in early 2026.
But before you rub your hands as you calculate possible returns for future stablecoin IPOs, have a look at their main business models. There are two significant risks for stablecoin issuers.
The first concerns stablecoin’s major revenue stream. If you look at Circle, more than 90% of its revenue comes from the interest earned on the reserves backing USDC, which are mostly held in short-term U.S. Treasuries and cash. Today, this is a highly profitable business strategy given the high interest environment in the US. Yet when the Fed lowers interest rates — which is not a question of if, but when — the yield on these assets drops. So Circle’s reserve income, and therefore its profits, declines proportionally. Circle’s own filings show just how sensitive its business is to rate changes: a 1% (100 basis point) drop in interest rates would cut Circle’s annual reserve income by about $441 million. This also means that if the Fed goes far enough with interest cuts, it could even make the entire USDC token unprofitable.
The second risk is one of competition. I have previously written a lot about so-called deposit tokens (see here or here). These are also a kind of stablecoin. Yet unlike private stablecoins, whose backing can be shrouded in secrecy, deposit tokens are directly tied to deposits held at licensed banks. They can even be eligible for deposit insurance. In other words, deposit tokens offer an additional level of security for users that private stablecoins do not. JPMorgan Chase has been at the forefront of deposit tokens, but other US banks are also starting to investigate stablecoins. We will most likely see a co-existence of these two variants for quite some time, but if deposit tokens turn out to be commercially successful, they will snap away a lot of growth potential from USDC and its peers. Hence, while stablecoins might be riding high in the short- and possible mid-term, their long-term future is far from clear.
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