Circle's IPO: A new benchmark for stablecoin valuation?

The Rise of Stablecoins

Stablecoins have stood out thanks to their unique ability to provide emerging markets with permissionless access to the US dollar, while enabling instant, low-cost cross-border transactions. Today, they are a major driver of crypto adoption, making it easier for new users to enter the ecosystem worldwide.

In this respect, stablecoin transaction volumes reached a record high of $1.82 trillion in April 2025, exceeding the combined annual transfer volume of Visa and Mastercard in 2024 ($27.6 trillion) by 10%.

The total stablecoin market cap now exceeds $250 billion and shows no sign of slowing down. One key indicator is the amount of US Treasuries held by stablecoin issuers: $128 billion, placing them among the world’s top twenty holders.

In this context, Circle’s IPO was a historic moment for the stablecoin market. It stands as an inflection point that could accelerate adoption, reinforce the integration of digital assets into traditional finance, and encourage other crypto industry players to seek a public listing in the US.

This research aims to provide a critical analysis of Circle’s IPO, its financial performance, its impact on the market, and its implications for stablecoin adoption. Finally, we propose to use Circle’s IPO as a proxy to frame a valuation approach for another major stablecoin player: Ethena.

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Circle IPO and Price Evolution

Circle Overview

Circle Internet Group, Inc., better known as Circle, is the issuer of two fiat-backed stablecoins: USDC (pegged to the US dollar) and EURC (pegged to the euro). Launched in 2018, USDC is the second largest stablecoin on the market, just behind Tether’s USDT, with around $62 billion in circulation as of July 2025.

USDC is backed by highly liquid reserves, including US Treasury bills, cash held at global systemically important banks (GSIBs), and other short-term public securities.

Circle’s IPO

On June 5, 2025, Circle successfully completed its initial public offering, becoming the first stablecoin issuer to be listed on the New York Stock Exchange (NYSE). Early backers included ARK Invest, JPMorgan, Goldman Sachs, and BlackRock, helping to raise $1.05 billion through the sale of 34 million shares at $31 each, well above the initial range of $27 to $28.

The offering was more than 25 times oversubscribed, making it the largest US crypto IPO since Coinbase in 2021 and highlighting institutional demand for stablecoin exposure.

The share price, under the ticker "CRCL," opened at $64, valuing Circle at nearly $18 billion on a fully diluted basis. On the first day, CRCL climbed to $103.75, with several trading halts due to volatility. The stock closed at $83.23, about 168% above the IPO price.

CRCL Price Evolution

This rally continued for several days, pushing the share price as high as $299 on June 23—an increase of 367% from the IPO price. The CRCL share then corrected by 42% through July 1, before rebounding 53% and stabilizing at its current price of $193 (down 35% from its all-time high).

It is worth noting that this successful listing followed the failure of a $9 billion SPAC merger in 2022. At the time, Circle had difficulty obtaining SEC approval in a highly scrutinized regulatory environment under the Biden administration.

Now, under a much more crypto-friendly Trump administration, the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) aims to set 1:1 reserve requirements at the federal level. By providing a clear regulatory framework, the GENIUS Act could legitimize stablecoins, support their issuance, and justify valuation premiums through wider institutional and retail adoption.

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Key Success Factors in Circle’s IPO

As the market grows and matures, investors are gradually moving away from purely speculative projects or unrealistic hopes of finding the next "100x" token. Retail investors are seeking yield strategies on stablecoins, which in turn is fueling institutional interest in these assets.

Designed to maintain a stable value, stablecoins are naturally attractive for capital preservation, but also for generating yield when properly integrated into decentralized finance, as is the case with USDC. This is why Circle’s IPO was viewed as an institutional proxy for betting on stablecoins.

Institutional Demand

Investors increasingly recognize stablecoins as essential bridges between traditional finance and digital assets. Large US banks and financial institutions have entered partnerships with stablecoin issuers and infrastructure providers, validating the asset class and attracting institutional capital.

Notable examples:

• Ripple’s RLUSD stablecoin, now with over $500 million in circulation,
• The partnership between Bank of New York Mellon and Circle, enabling bank clients to interact directly with USDC for minting and redemption,
• PayPal’s use of its dollar-backed stablecoin (PYUSD) for commercial transactions.

Regulatory Compliance and Reserve Transparency

In contrast to offshore, opaque players like Tether, Circle operates under multiple licenses, including money transmitter licenses in 46 US states, a BitLicense from the NYDFS (New York), and international authorizations such as an Electronic Money Institution license (UK FCA) and MiCA compliance in Europe.

As a listed company on the NYSE, Circle is subject to SEC disclosure requirements, including annual audits of its finances and reserves. USDC is backed 1:1 by dollar-denominated assets, mainly cash and short-term Treasuries, held in accounts segregated from Circle’s operational funds.

The Circle Reserve Fund, an SEC-registered money market fund managed by BlackRock, holds the majority of USDC reserves. Monthly attestations from a Big Four firm (currently Deloitte & Touche LLP) certify that reserve assets exceed the amount of USDC in circulation.

Circle’s Business Model

Circle’s primary source of revenue is “reserve income”, i.e. interest earned on the assets backing USDC. In 2024, Circle reported total revenue (including reserve income) of $1.676 billion, with $1.661 billion (99%) coming from reserve interest.

From 2023 to 2024, reserve income rose from $1.430 billion to $1.661 billion (+16.2%), reflecting both higher interest rates and increased USDC in circulation (from 55 to 62 billion).

For 2025, Q1 performance points to annualized reserve income of $2.314 billion on $62 billion of reserves, an effective yield of about 3.73%. This growth is consistent with rising rates in a favorable environment for profitability.

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Circle’s Financial Metrics and Valuation

Circle’s financial growth is primarily driven by interest income from USDC reserves, making it highly sensitive to two factors: the evolution of short-term US interest rates, and the total USDC supply.

Let’s first review the revenue model, rate sensitivity, and levers for income growth, then look at user adoption (USDC issuance), on-chain activity, ecosystem dominance, and the USDC market cap and transaction volumes.

Revenue

In 2024, annual revenue of $1.68 billion reflected 15.57% growth. Circle posted $578.57 million in revenue for the quarter ending March 31, 2025, bringing trailing twelve-month revenue to $1.89 billion, up 983.18% year-over-year.

While US T-bill yields hovered around 4.3%, Circle’s overall yield on reserves was 2.68% in 2024, reflecting the reserve mix: 85% in interest-bearing assets (Circle Reserve Fund), 10-15% in non-interest-bearing cash at banking partners.

At the SOFR rate, the effective yield is 3.15% ($1.661 billion divided by 85% of $62 billion in reserves).

Circle’s revenue-sharing agreement with Coinbase means about 50% of reserve interest is paid to the exchange. After accounting for this sharing and operational costs ($167 million), Circle posted net profit of $156 million in 2024.

All this highlights Circle’s heavy dependence on US T-bill yields—and thus, interest rate sensitivity.

Interest Rate Impact

• Scenario I (rate cuts)

If the effects of this year’s policy changes are less than expected, and disinflationary forces are stronger, the likelihood of rate cuts in the US remains high (as projected for Q4).

• Reserve Income = 0.85 × $62B × 1.95% = $1.03B
• Change vs 2024: $1.03B – $1.661B = -$631M
• New net profit (base 156M): 156M – 631M = –$475M

While bond yields may not track central rates perfectly, such a shift would force adjustments in reserve management.

• Scenario II (rate hikes)

If rates rise to 5%, effective yield climbs to 3.67%, for $1.934B in reserve income.

• Change: $1.934B – $1.661B = +$273M
• New net profit: 156M + 273M = $429M

This demonstrates that reserve yield is a major growth lever for Circle, capable of doubling or tripling revenues—though this scenario appears less likely.

Price-to-Earnings (P/E) Ratio

Circle’s P/E ratio, now at 2,536, raises concerns of "extreme overvaluation", as the company is set to report a loss in 2025. Nevertheless, support from prominent investors like ARK Invest and BlackRock shows the market’s willingness to bet on real mass adoption.

USDC Circulation

USDC supply has now reached a record $62 billion, consolidating Circle’s strategic position in the stablecoin sector. The 1:1 reserve requirement creates a feedback loop: as USDC supply grows, so do reserves—making this a key indicator of Circle’s financial health.

This dynamic is tied directly to USDC adoption and usage in the ecosystem. The average number of daily users has grown by 118.55% since the start of the year.

The 365-day transaction volume stands at $34.4 billion. Over time, USDC user activity, initially concentrated on Ethereum, has spread across Solana, Ethereum Layer 2s, and alternative blockchains like Hyperliquid, where USDC represents $5 billion.

This distribution illustrates USDC’s penetration across ecosystems, reinforcing its adoption and investors’ confidence in its ability to maintain—or even increase—its primary revenue source.

On centralized platforms, USDT remains the dominant stablecoin. On Binance, USDC represents about one-third of volumes, vs. double that for Tether. Note, however, that USDT is not yet officially regulated in Europe, a major brake on its use and an opportunity for USDC.

If USDC adoption continues for another 3–5 years (global payments, digital asset payments, real-world asset tokenization), supply could reach 150–200 billion dollars. With a conservative reserve ratio of 55–60% (currently 85%), this could mean $4–5 billion in annual yield income, nearly triple today’s levels, driven by both adoption and favorable rates.

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Ethena (ENA): The New Stablecoin Proxy?

The success of Circle’s IPO—with CRCL shares rising as much as +367% from the listing price at the peak—confirms surging investor appetite for the stablecoin sector. With Circle now highly valued and Tether absent from public markets, Ethena is a prime candidate to be the "next stablecoin proxy".

Ethena’s Public Listing via StablecoinX

Ethena is the issuer of USDe, the third largest stablecoin, with a market cap above $7 billion. In July 2025, Ethena announced its plan to go public through a merger with US SPAC TLGY Acquisition Corp. The resulting entity, StablecoinX, will be listed on the Nasdaq under the ticker “USDE”.

This transaction involves a capital raise of approximately $360 million, with notable backers such as Dragonfly, Pantera Capital, Polychain Capital, Galaxy Digital, and Wintermute. More specifically:

• $260 million in cash from institutional investors;
• $70 million in ENA tokens from the Ethena Foundation, contributed to the new entity as an in-kind capital injection.

In practice, these funds will be used immediately after signing to launch an ENA token buyback strategy, at a rate of $5 million per day over the next six weeks. Tokens thus acquired will be permanently locked on StablecoinX’s balance sheet, together with the ENA previously transferred by the foundation.

StablecoinX will thus operate as a publicly listed holding and a liquid proxy for exposure to the stablecoin market and Ethena’s ecosystem.

ENA Positioning

The StablecoinX structure will have a direct impact on Ethena’s ENA token. First, the $260 million will purchase about 390 million ENA tokens (at the current price of $0.67), or just over 6% of total supply.

Added to this are 110 million ENA tokens, about $70 million, which will also be locked in StablecoinX’s treasury. In total, around 8% of all ENA in circulation will be withdrawn from the market—a major "float removal shock" for a project of this size.

Furthermore, as the ENA price increases, the valuation of StablecoinX (which holds ENA in treasury) also increases, facilitating further capital raises. This mirrors the MicroStrategy–Bitcoin model. Clearly, this creates a strong positive feedback loop in bull markets, but raises concerns during bear phases for altcoins.

Regulatory Compliance with USDtb

One of Ethena’s major recent announcements was the launch of the USDtb stablecoin in the United States, positioned as the first "compliant" stablecoin under the GENIUS Act. USDtb is a digital dollar backed 100% by safe, liquid assets (mainly tokenized US Treasuries via the BlackRock BUIDL fund), issued through regulated infrastructures (notably Anchorage Digital, the first OCC-licensed US crypto bank).

Unlike USDe, which uses a synthetic approach and yield model based on crypto derivatives markets, USDtb is designed as an institutional stablecoin, compliant with new US regulatory requirements: strict separation of reserves, monthly attestations, KYC/AML compliance, and regulated custody structures.

This approach enables Ethena to address two complementary segments—potentially making it the main network to support them (with Converge):

• Crypto-native and DeFi users, with USDe and its high-yield model;
• Financial institutions, funds, corporates, with USDtb—a stable, transparent, regulated solution, eligible for holding by US institutional actors.

Ethena Valuation vs. Circle

Circle’s current market cap stands at $42 billion, after peaking at $66 billion at CRCL’s ATH. With net profit of $156 million, this yields a P/E ratio of 282—an exceptionally high figure reflecting today’s market euphoria for stablecoins, with Circle as the only available proxy.

For Ethena, ENA’s valuation is around $4.1 billion. Protocol revenues vary by data source; here, we use the DefiLlama estimate (the lowest), showing net profit of $114 million annualized. This yields a P/E of 36.

Applying Circle’s valuation multiple to Ethena, ENA would have a market cap of $32 billion.

As discussed earlier, Circle’s revenues are highly dependent on US interest rates: a modest drop (the consensus for coming months) would drive profits sharply lower. By contrast, Ethena’s revenues are based on funding rates in crypto derivatives markets and are therefore neutral to market direction.

Thus, at current levels, ENA trades at far lower multiples than Circle. This could present an opportunity—especially with the upcoming IPO, the growth of USDe and USDtb, the development of Converge, and Ethena’s business model.

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Conclusion

Circle’s IPO marks a milestone for the stablecoin ecosystem, ushering in a new era of legitimacy and growth for digital finance. Stablecoins have become a vital bridge between traditional finance and the crypto world, enabling seamless cross-border transactions, providing dollar access in emerging markets, and supporting global financial inclusion.

With record transaction volumes and reserves backed by substantial US Treasuries, the stablecoin market appears poised for continued expansion, supported by growing institutional interest and the prospect of regulatory clarity.

However, challenges remain: Circle’s business model, which depends almost exclusively on reserve yield (99% of revenues), makes it vulnerable to changes in interest rates. While a favorable environment may boost these revenues, any monetary tightening or regulatory obstacle would weigh on profitability. The evolution of the regulatory landscape, especially via the GENIUS Act, will be critical for the sector’s long-term trajectory.

Looking ahead, the stablecoin market shows considerable potential, with USDC supply at all-time highs and adoption growing across all blockchain networks. With over $60 trillion in cash circulating worldwide, it is likely that stablecoins will do to fiat currency what the Internet did to newspapers, and email did to letters.