Circle, the issuer of the $60 billion USDC stablecoin, has published a preliminary prospectus for its stock market IPO. The figures show attractive revenues of almost $1.7 billion for 2024, but operating income of just $167 million. While Circle isn’t parsimonious in its spending, the massive dent is the monies paid to Coinbase, which previously had a 50% stake in the stablecoin. Circle spent more than a billion in 2024 in distribution costs, most of which went to Coinbase. The biggest concern is whether this might constrain future opportunities.
Despite increasing competition, there are many opportunities given USDC is the leading regulated stablecoin. In late 2024 it entered into a deal with Binance, although the prospectus revealed this involved a significant upfront payment. For example, it mentioned a “$74.1 million increase in other distribution incentive costs related to new strategic distribution partnerships, including our upfront, one-time fee to Binance.”
While stablecoins are still heavily linked to crypto markets, USDC is in pole position to take advantage of a broader use of tokenized money market funds and stablecoins in capital markets, particularly the use of tokenized assets as collateral for margin. Circle recently acquired the yield earning tokenized treasury firm Hashnote, which has its USYC fund offering. Additionally, Circle entered into a deal with New York Stock Exchange owner ICE. In its prospectus it highlights that this combination of stablecoin and money market fund (MMF) means it can instantly redeem the tokenized MMF on demand, a key advantage that we’ve previously highlighted.
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