Circle IPO: Everything You Need to Know About Circle

What Do We Know About the Circle IPO?

Circle Internet Financial, known for its issuance of the USDC stablecoin, has taken a major step towards becoming a publicly-traded company by filing a confidential draft S-1 document with the U.S. Securities and Exchange Commission (SEC).

The specifics regarding the number of shares and their price range remain undecided.

This move to IPO follows Circle's previous attempt to go public via a special purpose acquisition company (SPAC) in 2021, which fell through.

The IPO is anticipated post-SEC review, conditional on market and other factors, potentially as soon as the first half of 2024.

What is Circle?

Founded in 2013, Circle has become a significant player in the cryptocurrency space, primarily known as the issuer of USD Coin (USDC).

Launched in 2018, USDC is a stablecoin pegged to the U.S. dollar, with a current market capitalization exceeding $25 billion as of January 2024. Despite recent market downturns and internal restructuring, including layoffs, Circle has maintained a strong presence in the digital currency market.

Source: Getty Images.

How Much is Circle Worth?

Previously, Circle's valuation reached approximately $9 billion in a 2022 deal for a public listing through a SPAC. However, after the deal's termination, the exact valuation in the upcoming IPO remains to be seen. Despite market challenges and the collapse of major crypto firms like FTX, Circle has shown resilience and growth potential.

Is Circle Profitable?

Given Circle has been a private company for its entire existence, we don’t have clear information on how, or to what extent, Circle is profitable. However, its significant market capitalization and sustained presence in the stablecoin market, despite industry fluctuations, indicate a strong business footing. The upcoming IPO might shed more light on its financial health.

What is Circle’s Business Model?

Circle’s primary business revolves around the issuance and governance of USDC, a stablecoin pegged to the U.S. dollar. This allows for stable value transactions in the volatile cryptocurrency market. The model benefits from the increasing adoption of digital currencies and the need for stable, reliable assets in crypto trading, as well as higher interest rates that the company can earn while holding traders’ cash.

Who are Circle’s Competitors?

Circle's main competitor in the stablecoin arena is Tether, with a market cap of around $95 billion. However, the stablecoin market is growing, with various other players emerging. Circle’s move to go public might further intensify competition in this sector.

Who Owns Circle?

Circle's investor base includes prominent entities like Goldman Sachs Group Inc., General Catalyst Partners, BlackRock Inc., Fidelity Management and Research LLC, and Marshall Wace LLP. Notably, Coinbase, a major cryptocurrency exchange, took a stake in Circle and committed to USDC's long-term success.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter: @MWellerFX