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USDC Issuer Circle Targets $600 Million IPO at Over $5 Billion Valuation, Acquires Hashnote for $100 Million

Leading stablecoin issuer Circle focuses on long-term independent growth in stablecoin market.

Circle, the issuer of the USDC stablecoin, is preparing for a significant milestone with an initial public offering (IPO) targeting a $600 million raise at a valuation exceeding $5 billion, according to its amended S-1 filing with the U.S. Securities and Exchange Commission (SEC). The company has applied to list its Class A shares on the New York Stock Exchange (NYSE) under the ticker "CRCL," with JPMorgan, Citigroup, and Goldman Sachs serving as lead bookrunners. Additionally, Circle disclosed its $100 million acquisition of tokenization platform Hashnote, primarily through shares, as part of its strategic expansion into tokenized real-world assets (RWAs). This move underscores Circle’s focus on integrating stablecoin infrastructure with tokenized financial products while dismissing acquisition rumors involving Coinbase and Ripple.

IPO Details and Market Context

Circle’s IPO plans involve offering 24 million Class A shares priced between $24 and $26, subject to market conditions. The filing, updated on May 27, highlights Circle’s ambition to capitalize on the growing adoption of stablecoins and tokenized assets in both crypto and traditional finance (TradFi). The company reported $1.67 billion in revenue for 2024, reflecting the strong market position of USDC, which remains one of the largest stablecoins by market capitalization, trailing only Tether’s USDT.

The IPO comes amid a wave of consolidation in the crypto industry, with notable deals including Ripple’s $1.25 billion acquisition of prime brokerage firm Hidden Road in April and Coinbase’s $2.9 billion purchase of derivatives exchange Deribit on May 9. Circle, however, has firmly denied reports of acquisition talks with Coinbase or Ripple, with a spokesperson stating, “Circle is not for sale. Our long-term goals remain the same.” This follows earlier claims that Circle rejected a $4–5 billion offer from Ripple, citing it as too low.

The crypto market’s favorable conditions, bolstered by a more relaxed regulatory environment under a crypto-friendly U.S. administration, have fueled renewed interest in public offerings. Circle’s IPO filing, initially submitted in April, positions it to leverage this momentum. However, investors have raised concerns about Circle’s profitability, noting shrinking gross margins and high operational costs, including over $250 million annually in compensation. These sentiments highlight challenges Circle may face in justifying its $5 billion valuation to investors.

Hashnote Acquisition Bolsters Tokenization Efforts

Circle’s acquisition of Hashnote, announced on January 21, was detailed in its IPO filings. The deal, valued at $100 million, included $9.9 million in cash and approximately $2.9 million fully vested Circle shares. Additionally, Circle agreed to issue up to $1.8 million more shares to Hashnote employees, vesting over time as compensation. Hashnote, initially backed by a $5 million investment from Cumberland Labs, is the issuer of U.S. Yield Coin (USYC), a tokenized U.S. Treasury product. According to RWA.xyz data, USYC has lost market share in the tokenized RWA sector, with BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) dominating at nearly $3 billion in assets.

The acquisition aligns with Circle’s strategy to integrate tokenized assets into its USDC ecosystem. A strategic partnership with global trading firm DRW, announced alongside the Hashnote deal, aims to drive adoption of both USDC and USYC in crypto and TradFi markets. Circle’s CEO, Jeremy Allaire, emphasized the acquisition’s role in expanding the company’s tokenized offerings, stating on X, “We have acquired Hashnote, issuer of the world’s largest Tokenized Money Market Fund (USYC). Hashnote has been a pioneer and is the largest issuer of TMMFs in the world today.” By leveraging Circle’s broader infrastructure, Hashnote’s integration could help regain market share.

USDC’s Role and Market Dynamics

USDC, with a circulating supply of over $60 billion, remains a cornerstone of Circle’s business. The stablecoin facilitates transactions across DeFi protocols, centralized exchanges, and institutional use cases. Circle’s IPO filing highlights its focus on expanding USDC’s utility through tokenization, as seen with the Hashnote acquisition. However, competition in the tokenized RWA space is intensifying, with BlackRock’s BUIDL outperforming USYC. Additionally, researchers have compared Circle unfavorably to Tether, noting the latter’s stronger profitability and business model.

Circle’s revenue model relies heavily on interest income from USDC’s fiat reserves and transaction fees. However, rising distribution costs and regulatory uncertainties in the U.S. could pose challenges. The company’s IPO filing acknowledges these risks, noting that the registration statement is not yet effective, and securities cannot be sold until approved by the SEC.

Strategic Implications

Circle’s focus on its IPO and the Hashnote acquisition signals a broader push into tokenized financial products, a sector gaining traction as institutions explore blockchain-based solutions. The partnership with DRW and the integration of USYC aim to bridge crypto and TradFi, potentially positioning Circle as a leader in this space. However, the company must navigate competitive pressures and investor skepticism about its valuation and profitability.

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