When Circle filed its S-1 with the SEC on April 1, many outside observers were shocked, and not in a good way. Despite its $60 billion supply of USDC at the time, the company only made a profit of $156 million in 2024. In contrast, rival Tether made a massive $13 billion profit in the past year.

Circle was targeting a multi-billion-dollar valuation, and the trolls on X were quick to wonder, despite its size, whether it could make enough profit to justify such a number. Some were even meaner, pointing out how Coinbase likely made a significantly higher profit from USDC than Circle. On the S-1, Circle pointed out that in 2024 it paid over $1 billion in distribution costs, which is interpreted to mean its close partnership with Coinbase. In its 2024 annual report, Coinbase reported $910.46 million in stablecoin revenue. You do the math.

But when it came time for investors to show their cards, they bet big on Circle. 

Rumors had already been swirling that the raise, which sought to sell 34 million shares at $31 apiece, was oversubscribed by as much as 25x. Then when the stock started trading it debuted at an even higher $69. It ended up topping $100 during intraday trading before settling above $83.

I was able to speak with Circle Chief Strategy Officer Dante Disparte today, and the first question that I asked him is what about Circle’s vision made it so easy for investors to buy in. “[USDC] is so much more than a poker chip in a crypto casino. This innovation is a breakthrough in dollar settlement at world scale. USDC is operational across nearly 20 blockchains and has processed more than $13 trillion in transactions on its own,” he said.

Digging in a little deeper, Disparte pointed out the legwork that the company has been doing to cast its net across the entire globe. “We were the first company to be compliant in Europe under MiCA. We were the first firm, and USDC is the first product, to be passported into Japan, similarly in the UAE,” and he pointed out that there are many other markets where USDC is the first to get regulated access.

This is a long play for Circle, which is spending big to build an omni-directional blockchain-based payments system for its digital dollar. Though for what it is worth, Disparte declined to comment on concerns about its meager profitability versus Tether.

So what are the big questions that I’m thinking about right now when it comes to USDC and Circle?

• Can Tether win over Uncle Sam? USDC has a circulating supply of $61.5 billion, good for second place behind $153.8 billion Tether. But right now it has a clearer path to operating in the U.S. than its foreign competitor, which is still trying to figure out how any future stablecoin legislation will apply to it, and is starting from relative scratch in building an institutional network in the U.S. How Tether navigates this challenge will have a big impact on Circle’s long-term trajectory. One big feather in Tether’s cap is that it counts the U.S. Commerce Secretary Howard Lutnick’s former firm Cantor Fitzgerald as an investor and business partner.

• When will the big boys come play? When I spoke with Tether CEO Paolo Ardoino years ago, he told me that his stablecoin would be swallowed up if or when Wall Street banks entered the arena. Well, if the Senate’s stablecoin bill, the GENIUS Act, passes, that will happen. Bank of America CEO Brian Moynihan has already said as much in recent weeks. Stablecoins are a numbers game as much as anything. Is USDC big enough to hold off potential rivals? As a point of comparison, JPMorgan had $2.4 trillion worth of deposits at the end of 2024. In fact, when I did the profile on Allaire back in 2023, I asked one very prominent congressman on the House Financial Services committee, who requested anonymity, this very question. Here was his response: “Typically regulation entrenches incumbents, but that may not be the case here. I think that Circle is underestimating the threat from big banks. If it becomes profitable to have a stablecoin, why wouldn’t banks enter that space? JPMorgan could crush Circle.”
• Will it have to share the wealth (even more)? This is the 800-lb elephant in the room. From one vantage point stablecoins seem like a perfect business. The issuer collects dollars, invests them in ultrasafe (sort of) Treasuries, and collects the profits. Unlike a bank that pays interest on deposits, they don’t have to share anything with their customers. In fact, they are prohibited by laws like MiCA and the current draft of the GENIUS Act from even doing so. Is this fair? Can this last? Here’s what Disparte had to say on the subject. “In our view, generating yield in digital asset markets is an important feature. Our support for decentralized finance, our support for the openness of digital assets broadly and making USDC and our Euro stablecoin available across multiple blockchains promotes responsible secondary market innovations [like this].” He went on to say, “We think that’s an appropriate way to conceive of a stablecoin that is fully reserved and designed to frankly meet the features of money with the features of the internet, without straying into alternative regulatory territory.” So far he is right.

Number of the Week: 83.30

– CRCL’s first closing price

– The company ended the day with a market capitalization of $16.69 billion

Chart of the Week: USDC’s Surging Usage and Growth

– USDC shook off its disastrous March 2023, and key metrics such as active users, market capitalization, and transfer volume are all looking up