Circle Internet Financial, a prominent U.S.-based cryptocurrency company that issues the stablecoin USD Coin (USDC), has submitted long-anticipated paperwork for an initial public offering (IPO) as reported on Tuesday. The comprehensive 225-page financial disclosure provides new insights into Circle, one of the largest cryptocurrency firms globally, highlighting the company’s significant influence within the expanding stablecoin market and outlining potential risk factors for investors contemplating the IPO.
Established in 2013, Circle previously attempted to go public, resulting in an unsuccessful SPAC agreement in 2022, which incurred over $44 million in losses, as stated in the S-1 filing. With the cryptocurrency industry gaining momentum in the U.S., partly due to President Donald Trump’s support, Circle is optimistic that this new attempt will be successful. In 2024, the company reported revenues exceeding $1.6 billion, aiming to attract prospective investors.
Although the filing does not specify a timeline for Circle’s public offering, shares typically start trading within weeks of an S-1 submission. Reports indicate that Circle is collaborating with investment banks JP Morgan Chase and Citi on the IPO under the ticker symbol CRCL.
Circle’s Growth and Revenue Dependence on Stablecoin Reserves
Co-founders Jeremy Allaire and Sean Neville established Circle with the intention of revolutionizing the payments space with products such as a crypto exchange and a service similar to Venmo. In 2018, the firm shifted its focus to stablecoins, cryptocurrencies pegged to assets like the U.S. dollar. The popularity of USDC surged during the recent crypto bull market, its market capitalization rising from under $1 billion in 2020 to over $50 billion in 2022. Backed by dollar-like assets such as U.S. treasuries, Circle retains substantial returns on the interest generated, comprising the majority of the company’s revenue; in 2024, over 99% of Circle’s $1.68 billion revenue stemmed from reserve income, with only $15 million derived from other sources. This reliance poses a risk, as it is dependent on government-set interest rates, with potential decreases posing a significant decrease in revenue.
Partnerships with Coinbase and Binance to Increase USDC Adoption
Circle initially designed USDC to be a collaborative effort between crypto firms and traditional financial institutions, leading to the creation of the consortium Centre. Despite this, Coinbase was the only other participant. In 2023, Circle and Coinbase dissolved Centre but remained partners for USDC, with the partnership evolving to include a minority equity stake in Circle by Coinbase. Additionally, Circle’s strategic partnership with Binance aims to boost USDC adoption, including a one-time payment of $60.25 million and ongoing monthly fees tied to USDC holdings.
Competitive Landscape and Legislative Developments
USDC’s market cap has significantly increased over the past year; however, it faces formidable competition, including the offshore Tether and PayPal’s new stablecoin, along with financial giants like J.P. Morgan exploring blockchain. Circle remains optimistic about the potential benefits of stablecoin legislation in the U.S., as legislative developments could enhance regulatory clarity, despite potentially inviting more contenders to the market.
Major Investors and Financial Prospects
Key executives, including Allaire and CFO Jeremy Fox-Geen, along with venture capitalists holding significant equity stakes in Circle, stand to gain substantially from the forthcoming IPO. Major investors include General Catalyst, IDG Capital, Breyer Capital, Accel, Oak Investment Partners, and Fidelity. Collectively, these investors currently own over 130 million shares in Circle, which reportedly targets a $4 to $5 billion valuation for the IPO.
Executive Compensation
Circle’s executive compensation is notably high, with Allaire receiving a total compensation package exceeding $12 million, and Fox-Geen earning $5.2 million. Other top executives, including Chief Strategic Engagement Officer Elisabeth Carpenter, President and Chief Legal Officer Heath Tarbert, and Chief Product and Technology Officer Nikhil Chandhok, each earn between $4 and $5 million, according to the SEC filing.
This information was originally published on Fortune.com.
