after years of anticipation USDC issuer
Circle is getting ready to go public on the surface this could help Circle become one of
the most profitable companies in crypto however once you dig a little deeper you realize that this
success is far from guaranteed that’s because many observers have pointed out a number of red flags
which could make it a potentially risky investment that’s why today we’re going to do a deep dive to
determine whether Circle stock has potential or if it’s doomed to fail my name is Guy and you’re
watching the Coin Bureau i’ll start by saying that nothing in this video is financial or investment
advice this is purely educational content sprinkled with that Coinbau charm that you know
and love but if you’re looking to maximize your crypto gains then you have to check out the Coin
Bureau deals page it’s got exchange signup bonuses of up to $100,000 trading fee discounts of up to
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link below while you still can okay so with that out of the way let’s dig in now recently Circle
made headlines when it announced that it had filed with the SEC for an initial public offering
or IPO but to understand why this is significant let’s start with a bit of context circle Internet
Financial Inc or just plain old Circle was founded in 2013 by Jeremy Alair and Sha Neville who have
worked together for decades to build and later sell or IPO cuttingedge tech companies jeremy
has served as the chairman and CEO of Circle since it was founded while Sha served as Circle’s
president until late 2019 when he stepped down to join its board of directors jeremy later revealed
that Sha was still involved with Circle working on secret stuff interesting anywh who Circle’s
original focus was Bitcoin payments and it wanted Bitcoin to be the foundation of a new financial
system albeit one that’s closed and centralized rather than one that’s open and decentralized in
2017 Circle and other Trady entities collectively tried and failed to push a number of changes to
the Bitcoin network these included adding smart contract capabilities as seen on blockchains
like Ethereum as well as increasing Bitcoin’s block size to make it scalable enough to handle
their plans for a re-imagined financial system this plan called the New York agreement was
actually overseen by Digital Currency Group or DCG which has stakes in many top crypto
companies including Coinbase and Circle anyway Circle soon realized that Bitcoin isn’t the
ideal payments network and instead turned to Ethereum where it decided to build its own stable
coin in 2017 after raising around $110 million in 2018 Circle launched US Dollarcoin or USDC on
Ethereum that same year Circle teamed up with Coinbase one of the largest centralized exchanges
in the world to create the Center Consortium now the goal was to set standards for stable coins
issued on public blockchains and to govern the issuance and redemption of USDC the consortium
was dissolved in 2022 apparently because it was deemed no longer necessary due to clearer stable
coin regulations in the US and elsewhere circle subsequently acquired Coinbase’s 50% stake
in the company and became the sole issuer of USDC in turn Coinbase received 50% of the revenue
generated from USDC’s reserves more on that later now as most of you will know USDC is pegged to
the dollar and is backed by cash and short-term treasuries aka US government debt usdc is the
second largest stable coin by market cap behind Tether’s USDT with around $60 billion worth in
circulation usdc is currently supported on 19 blockchains and counting and makes up roughly 26%
of the total market cap for stable coins while USDT makes up about 62% however USDC’s market cap
has grown significantly more than USDTs in 2025 so far and speaking of statistics did you know
that 36% of you aren’t subscribed to this channel so hit those like and subscribe buttons and
ping that notification bell to make sure you’re not missing out now as we mentioned in the
introduction Circle’s latest attempt at an IPO is keenly anticipated partly because the company has
been trying to go public for years circle’s first attempt was way back in July 2021 via a merger
with a special purpose acquisition company or spa now because this was in the middle of the
previous bull market there was a lot of excitement around Circle’s potential IPO not least because
Coinbase had also gone public just a few months previously however despite multiple extensions
the attempt came to nothing after the SEC failed to sign off on the proposal in time circle
ultimately scrapped its IPO proposal towards the end of 2022 after FTX collapsed and brought
the entire crypto market crashing down with it put simply Circle knew that launching at such a
chaotic time would have been begging for increased and probably unfavorable regulatory scrutiny from
the SEC but this wasn’t the end of the matter in January 2024 Circle filed a confidential draft
registration for another IPO attempt and then on the 1st of April this year Circle filed again
with the SEC this time to launch its stock on the New York Stock Exchange under the ticker CRCL
notably the stock’s proposed price and the number of shares are not yet known this will be revealed
in a later filing anyhow the latest filing from Circle is actually a continuation of the January
2024 filing we mentioned just a moment ago the reason why this process has dragged on for so
long is simply because of the hostile regulatory environment prior to Donald Trump’s reelection
in late 2024 in the filing Circle said quote “We think that we can create a new defining internet
platform company that is built on the internet financial system and we believe that we are still
in the very early stages in the development of this new financial system.” However CEO Jeremy
Aair has said that Circle will have to navigate a highly regulated and evolving ecosystem a complex
global macro environment and the challenges that arise from intersecting crypto with the legacy
financial system in the risks section of the IPO filing Circle noted the competitive nature of the
crypto industry and its ability to monetize its stable coin network as its two biggest hurdles to
overcome notably the company is reportedly aiming to launch at a valuation of up to $5 billion
much to the confusion of some investors we’ll come back to why this is confusing in just a
moment now while the announcement on the 1st of April had many excited about Circle going public
these feelings were dampened on the 4th of April that’s because Circle is reportedly now delaying
its planned IPO due to all the macro uncertainty caused by yep you guessed it the tariffs that
were recently implemented by President Trump and you can learn more about those by checking
out the video right over here moving on in any case the Wall Street Journal reported that
Circle is now quote waiting anxiously before taking any further steps and it’s not alone
other companies both inside of crypto and outside of it are likewise considering holding
off on launching their IPOs too these include Cler a well-known buy now pay later company and
the ticket company StubHub to name just two now Circle’s decision to potentially delay its IPO
comes at a time when markets of all kinds are taking a beating following Trump’s announcement of
a 10% base tariff along with much higher tariffs on certain countries particularly China on the
2nd of April this spooked the markets big time and stoked fears of a possible global recession
and naturally this means investors everywhere are ditching their riskier investments for safer
alternatives for perspective the total value of the US stock market has fallen by a staggering
$10 trillion since Trump’s announcements in fact the damage has been so catastrophic that Trump
has had to roll back some of his tariff plans so uncertain times to say the least now what’s
crazy is that Circle’s recent IPO filing is the first time that the company’s full financials have
been made publicly available and it didn’t take long for investors to realize that Circle faces
additional challenges besides Trump’s tariffs and whatever else and this is where things get
seriously interesting so pay close attention the filing revealed that Circle had minted
roughly $54 billion in USDC and redeemed about $464 billion in USDC between the 1st of January
2021 and the 31st of December 2024 we should note that while this high turnover reflects the
heavy usage of USDC it doesn’t necessarily equal profit the filing also revealed that
in 2024 Circle’s revenue was $1.68 68 billion more than 99% of which was generated by managing
USDC’s reserves which will remind you primarily consist of US Treasury bills that earn interest
notably Circle’s 2024 revenue was up 16% from its 2023 revenue of 1.45 billion so all pretty
good news right well yes but there is a catch that’s because Circle’s operating income which is
basically what’s left after paying for day-to-day operations like salaries and overheads was just
$167 million before interest and taxes that’s just 10% of its overall revenue which is spreading
it thin to say the least in fact Circle’s adjusted IBITa which stands for earnings before income tax
depreciation or amortization was just $284 million for anyone unsure IBITa essentially measures a
company’s core profitability before expenses in a nutshell it takes a company’s operating income and
then adds back any depreciation and amortization which are non-cash charges that account for the
gradual decline in asset value over time but for many investors the biggest red flag of all has to
do with Circle’s former center consortium partner Coinbase as you’ll recall Coinbase takes
50% of Circle’s revenue generated from USDC what this means is that in 2024 alone Circle paid
Coinbase a whopping $98 million now this is insane because it’s more than half of Circle’s overall
revenue and more than Circle itself earned from USDC this is making investors incredibly nervous
and that’s because these payments to Coinbase mean that even though Circle’s revenue grew in
2024 its profits actually shrunk to make matters worse the IPO filing also revealed that Circle’s
financials seriously struggled during the bare market of 2022 when the company actually saw a
net loss of $761 million logically this means there’s a good chance that Circle will be bleeding
cash whenever the next bare market comes around when you combine everything we’ve just covered it
isn’t hard to see why some investors are having a hard time understanding Circle’s self-evaluation
of being a $5 billion company to be blunt the overall picture doesn’t exactly scream profitable
investment but here’s the thing while Circle’s financials appear shaky at best there are a
number of bullish factors that could cause its stock to pump the obvious standout here is the
massive yield being generated by Circle’s reserves recall that this is how Circle has made almost
all of its revenue in case you haven’t noticed interest rates have been high and many believe
that they’ll stay high as a result of inflation related to Trump’s tariffs these higher interest
rates could paradoxically be good for Circle since it means that its USDC reserves will rake in more
passive income naturally this would significantly boost the company’s revenue which would make
its financials much more attractive to potential investors and not only that but it was revealed
in Circle’s IPO filing that it could be working with JP Morgan and City Bank two major financial
institutions that will serve as underwriters for the IPO listing these Wall Street giants will
support Circle’s IPO by providing financial backing this backing gives Circle massive
potential for expansion especially when it comes to USDC’s role in payments now if you watched
our video on PayFi you’ll know that this is one sector that’s all but guaranteed to see rapid
growth and adoption once stable coin regulations are passed this will seriously drive demand for
stable coins like USDC which will in turn boost Circle’s revenue in a big way and this relates to
another way that Circle could exceed expectations which is its offering of lesserk known products
these include EURC another stable coin that’s pegged to the euro and Circle’s recently upgraded
cross-chain transfer protocol or CCTP the newly introduced CCTP version 2 allows near instant
transactions between chains making USDC highly liquid cross-chain circle also offers Circle Mint
a service that lets exchanges and institutions mint large volumes of USDC without incurring
transaction fees this potentially positions USDC as the weapon of choice for investors looking to
move substantial sums of US dollars in a digital way meanwhile another bullish tailwind for Circle
is one I touched on a few moments ago and that’s clear stable coin regulation while this is very
much still a work in progress Congress has taken considerable steps to create federal stable
coin laws with bipartisan support for clearer regulations and enhanced oversight in February
2025 Senator Bill Hagerty introduced the Guiding and Establishing National Innovation for US stable
coins or Genius Act basically the Genius Act aims to establish a universal regulatory framework
with oversight from regulators like the Federal Reserve and the OC in March the US Senate Banking
Committee approved the Genius Act with bipartisan support and in April the House Financial Services
Committee approved the Stable Act another attempt to bring regulatory clarity to the industry
as a result many analysts expect stable coin regulations to be passed in the next few months
now clear stable coin rules will undoubtedly boost investor confidence further driving institutional
adoption and yet one more bullish factor that many analysts seem to be overlooking is Circle’s recent
acquisition of Hashnote back in January now for those unfamiliar Hashnote is the issuer of US
Yieldcoin or USYC one of the biggest tokenized real world asset funds by market cap in the
announcement of the deal Circle said it would quote enable USYC to emerge as a preferred form
of yield bearing collateral on crypto exchanges and also with custodians and prime brokers notably
the announcement also said that Circle intends to fully integrate USYC with USDC although we should
caveat that USYC isn’t available in the US at the time of shooting regardless integrating USYC with
USDC will position Circle as a leader in tokenized realorld assets or RWAS and could also create
new opportunities for the company to generate additional revenue through management fees and
interest income from USYC so then all of this begs the question of whether Circle’s CRCL stock will
actually be worth it once it does eventually list well the answer is a bit of a mixed bag but it
seems that CRCL’s success is largely dependent on timing put simply Circle could seriously benefit
from the bullish factors we just mentioned but if the IPO goes live during the peak of the bull
market then CRCL could go down only just like Coinbase’s Coin stock did when it launched back
in 2021 and if Circle stock is launched when sentiment is already low this will make it almost
impossible for it to hit the ground running but for anyone wondering if the bull market is still
in play ask yourself this simple question would all the companies we mentioned earlier like
Circle Kraken Gemini Ripple and others be even considering an IPO in a bare market clearly these
guys aren’t concerned about the recent draw down which suggests that the pain we’re all feeling is
only temporary this is significant because crypto speculation continues to be the primary demand
driver for stable coins in the case of USDC its primary demand driver is speculation in DeFi if we
get another wave of crypto speculation chances are there will be significantly more DeFi borrowing
which will ultimately benefit Circle since this borrowing will have the practical effect of
minting more USDC and Circle could also benefit from the RWA sector which we believe could also
be one of the most successful crypto narratives this cycle recall that Circle’s acquisition
of Hashnote and its tokenized USYC fund has positioned Circle as a major competitor in the RWA
narrative this has allowed the stablecoin issuer to tap into the institutional liquidity that will
be flowing into RWAs still there’s no denying that the details revealed in Circle’s IPO listing do
leave a lot to be desired in fact some analysts have said that Circle has been overspending in
an attempt to maintain its competitiveness in the stable coin sector and this calls into
question how sustainable this really is and raises questions around Circle’s riskmanagement
capabilities some of the more skeptical analysts have even suggested that Circle’s IPO filing could
be nothing more than an attempt to gain some extra liquidity before the next crypto bare market hits
and if we’re being honest it’s not hard to see why some would think like that to be frank it’s
kind of difficult to see why many investors would be inclined to ape in to circle CRCL stock in the
short term when practically everything is pointing to them taking on more risk than they bargained
for from our perspective the long-term success of CRCL largely depends on how long Circle will
have to share 50% of its revenue with Coinbase that’s because Circle’s IPO filing mentions a
three-year term which can be extended for another 3 years now it’s unclear if this deal can be
extended again in the future but what is clear is that the deal can be terminated however Coinbase
will only want this to happen if it launched its own coin unfortunately Coinbase is adamant that
this won’t happen but that’s not to say that it’s definitely ruled out so then it remains to be seen
whether Circle’s IPO will go ahead in the face of Trump’s tariff whirlwind or whether the company
will wait for wider macro conditions to improve before going public in any case watch this space
thank you now if you want to see my colleague Nick interview Circle CEO Jeremy Aair then check out
this video right over here and if you want to see our top five stock picks for crypto exposure
then you can check out this video right over here okay thank you all for watching and we’ll see
you in the next one this is Guy signing off
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