Circle, the issuer of the second largest stablecoin USDC, landed on the New York Stock Exchange, becoming the first stablecoin company to be successfully listed in history, attracting the world's attention. Today, the Sajie team will briefly talk to you about the possible impact of this event on the stablecoin track and even the entire currency circle.
01 Circle NYSE rings the bell
Circle, the world's second largest issuer of the US dollar-pegged stablecoin USDC, was officially listed on the New York Stock Exchange on June 5, with the stock code "CRCL". This is the first IPO in the field of stablecoins. The successful listing may mean that the stablecoin business model has been recognized by the traditional capital market.
Circle was founded in 2013 and is a US-based financial technology company with its core product USDC. This stablecoin is pegged 1:1 with the US dollar and is used for payment, settlement and digital dollar value storage worldwide. Its market share is second only to USDT issued by Tether. In April this year, Circle applied to the US Securities and Exchange Commission (SEC) for listing on the New York Stock Exchange. The company appointed top investment banks such as JPMorgan Chase and Citi as underwriters for this IPO. According to the updated documents submitted by Circle to the US SEC on June 2, the company plans to issue 32 million Class A common shares with an issue price range of US$27-28. It is expected to raise up to US$896 million and the issue market value is close to US$6.2 billion.
This is Circle's second IPO. The actual issue valuation of about US$7.2 billion is actually lower than the initial SPAC valuation of US$9 billion, which fully demonstrates the market's recognition of its actual value. The successful listing is also related to the bull market of crypto assets and the shift in US regulatory strategy. After the new US government introduced a series of favorable policies for crypto assets, it greatly helped the development of the market and created a better operating environment for crypto companies such as Circle.
02 What does the listing of the second brother of stablecoin mean?
One person's opinion, the team of Sister Sa believes that Circle's listing on the New York Stock Exchange is a milestone in the in-depth cooperation between the crypto asset industry and traditional finance. For Circle, it is also a major victory in the layout of financial infrastructure. One of the purposes of Circle's listing is to use the information disclosure system of the US Securities and Exchange Commission to establish a solid public trust, seize the global market share of stablecoins, and then lay the foundation for a certain global financial discourse power in the future and increase the bargaining chips for obtaining licenses in global jurisdictions in the future. Of course, expanding the scale of funds and further expanding the scope of business is also one of its purposes.
Sister Sa's team believes that Circle, as one of the leading players in the stablecoin track, has great development potential after its successful listing. If its compliance (especially information disclosure) is good enough, and the public can supervise the company's assets through independent third-party auditing agencies, then the company will become one of the most compliant and secure companies in the current stablecoin track, which will be of great help in building public confidence.
In terms of business risks, Circle's business model is actually very simple: the company issues USDC stablecoins anchored 1:1 with the US dollar, and directly invests the $60 billion deposited by users in short-term US Treasury bonds to earn risk-free returns. This "lying and earning" business model will generate about $1.6 billion in interest income for Circle in 2024, accounting for 99% of Circle's total revenue. On the one hand, this business model is more suitable for the requirements of the stablecoin track for "safe and stable" assets; on the other hand, in terms of business risks, Circle's biggest risk comes from its own single business model, which is completely dependent on the stable and healthy development of a country's own financial and monetary system. If a country significantly reduces interest rates, Circle's profits will also be greatly reduced.
In addition, we also noticed that Circle's net profit fell from US$268 million to US$156 million in 2024, which may be related to the business cooperation between its shareholder Coinbase. At present, this situation is a situation that should be paid attention to. It is difficult to judge whether it is a "risk" that needs to be vigilant. Let the bullet fly for a while.
03 What can we learn from the "Second Brother" in the stablecoin track?
First, Circle's listing is a major boon to the stablecoin field and even the entire crypto industry. It means that the traditional financial market has accepted the crypto market, and that the US regulators have made a major shift in their regulatory attitude towards the crypto industry, releasing a positive signal for the industry.
Secondly, for the subsequent development of stablecoins, the Sister Sa team believes thatcompliance and public trust are still the lifeblood of practitioners in the stablecoin industry. For example, the current leader in the stablecoin market, Mouda Company, suffered a big loss in the EU market because it was unwilling to fully disclose its asset reserves, and failed to obtain a license in the EU market, which in turn had a bad impact on the market. After Circle seized the opportunity to go public again, it is foreseeable that its market share may be further eroded.
04 Written at the end
When stablecoins began to ring the bell at the New York Stock Exchange, we saw not only the successful breakthrough of enterprises, but also the evolution of the entire industry. For investors, it is more important to pay attention to the transparency of reserves than to chase short-term gains; and for practitioners, now is the golden window period to reconstruct the industry's trust system. After all, in this ever-changing battlefield, surviving is always more valuable than running fast.
Therefore, for the layout institutions of stablecoins, the Sister Sa team recommends that, regardless of whether they are preparing to go public, they need to make compliance and information disclosure their work priorities, and winning public trust is the most critical factor in determining the survival of an enterprise.
Kikyo
Weatherly
Catherine
Anais