Stablecoin Issuer Circle Goes Public with Stunning Undervaluation
Circle Internet Financial, the issuer of the USDC stablecoin, has become a publicly traded company. On June 5, trading began on the New York Stock Exchange.The company raised nearly $1.15 billion—but the market would have been willing to pay much more. This IPO could mark a pivotal moment in the history of money.
In some ways, Circle CEO Jeremy Allaire has taken a cue from MicroStrategy boss Michael Saylor. With its IPO, Circle is now doing with government bonds what MicroStrategy does with Bitcoin: the stock promises to be increasingly backed by government bonds.
On June 5, Circle issued 39 million out of a total 199.97 million shares at a price of $31 per share. The bookrunners—that is, those who purchased at this price and then sold the shares on the stock exchange—were J.P. Morgan, Citigroup, Goldman Sachs, Barclays, Deutsche Bank Securities, and SOCIETE GENERALE.
With these roughly 20 percent of the shares traded on the New York Stock Exchange, Circle took in about $1.145 billion—a sum that appears to be grotesquely undervalued.
The math is actually simple: Circle holds $51.3 billion in the „Circle Reserve Funds„, a fund managed by Blackrock that currently yields 4.23 percent. This equates to $256 in well-yielding capital per share. And if the amount of USDC in circulation continues to rise without Circle issuing new shares, this ratio will continue to increase.
For the market, $31 was of course a bargain. The price jumped to $88 on the very first trading day—an increase of about 180 percent, representing the largest jump a public company has made on its IPO day since 1980. Today, the share price stands at 94 euros, with a high of almost 120 euros just yesterday.
This was great for the bookrunners and institutional investors who were able to purchase at $31—but not so good for Circle itself. Through the IPO, the company could have raised three or four billion dollars. Thus, Circle is among those companies that have “left the most on the table” during their initial public offering.
Circle is the only major stablecoin issuer to have obtained a license for the European market under MiCA (Markets in Crypto-Assets). Circle also appears prepared to comply with the GENIUS regulation in the US, while Tether—the issuer of the largest stablecoin—has already indicated it does not intend to comply with MiCA or GENIUS directly.
In short—Circle has excellent prospects to dominate both the American and European “white” (compliant) stablecoin markets, which will undoubtedly be factored into the company’s valuation.
It is also noteworthy that Circle, through its IPO, not only received the green light from the securities regulator, but also the backing of some of the world’s largest banks. The understanding of what stablecoins really are is spreading: “Fiat money with superpowers,” writes Finextra on the occasion of the IPO.
The real competition, quotes the magazine from a former advisor to the Bank for International Settlements (BIS), “is not between crypto and fiat, but between programmable and static money.” The financial publication recognizes what is at stake, advising “entrepreneurs working with digital finance”:
“This IPO should be read as a directive: Don’t just disrupt—integrate. Don’t just tokenize—institutionalize. The winners of the next cycle will not be the loud anarchists or the passive developers. They’ll be the architects of a new monetary stack—those who can offer regulatory-compliant, yield-generating real world assets to treasuries, DAOs, and sovereign wealth funds looking for stable returns in a programmable world. That is where the real liquidity will flow.”
In other words: the upgrade of our money technology is already underway—and with Circle’s IPO, the US financial system has crowned its champion. The European drama over credit cards, search engines, and social networks is replaying before our eyes.