The First Stablecoin Stock: Circle’s Deepening Ties with China

By Naetitia, TechFlow

Circle Internet Group, Inc., the issuer of the world’s second-largest stablecoin, USD Coin (USDC), has made waves with its recent IPO on the New York Stock Exchange under the ticker “CRCL.” Valued at approximately $5.65 billion, Circle’s IPO marks it as the first major stablecoin issuer to go public, positioning it as a pivotal player in the global financial system.

While Circle’s journey began with ambitions to become the “American Alipay,” its evolution has been shaped by strategic partnerships, including significant ties to China, a transformative focus on USDC, and a business model that leverages U.S. Treasury securities for near-risk-free profits. As Circle moves forward, it carries the strategic weight of advancing U.S. dollar dominance and supporting the U.S. Treasury market.

The Dream of an “American Alipay”

Founded in 2013 by Jeremy Allaire and Sean Neville, Circle set out to revolutionize peer-to-peer payments, aiming to emulate China’s Alipay, a dominant force in mobile payments.

Circle’s initial product was a digital currency wallet, primarily offering storage and fiat exchange services for cryptocurrencies (Bitcoin), leveraging Bitcoin to enable rapid fund transfers. For example, international transfers via SWIFT typically require 3-5 business days for confirmation, but with Circle, users could rely on a “cash-to-Bitcoin-to-cash” pathway for swift transfers.

In August 2015, Circle secured $50 million in funding led by Goldman Sachs and IDG Capital. IDG’s investment laid the groundwork for Circle’s later connections with China.

In September, Circle obtained the first digital currency license, BitLicense, from the New York State Department of Financial Services, allowing it to provide licensed digital currency services in New York State.

Strategic Ties with China: From Funding to Global Ambitions

Circle’s relationship with China has been a cornerstone of its growth, beginning with significant financial and strategic alignments. In 2016, Circle raised $60 million in a Series D funding round led by Chinese venture capital firms, including IDG Capital, Breyer Capital, and China Everbright Limited, as part of a broader $135 million raised from 2013 to 2016, which also included Goldman Sachs.

On the eve of Circle’s IPO, the stock price of Hong Kong-listed China Everbright Limited surged continuously, rising 44% over five days, underscoring the depth of their connection.

In early 2016, Circle established an independently operated entity in China, Circle China, under the legal name Tianjin Circle Technology Co., Ltd., symbolizing “a payment system that can circulate worldwide.” The company was led by CEO Tong Li, who was then an Entrepreneur-in-Residence (EIR) at IDG Capital, with , Dr. Xiao Feng, founder of Wanxiang Blockchain and chairman of HashKey Group.

Founder Jeremy Allaire stated that Circle would operate within China’s regulatory framework and would not launch products without government approval. Additionally, Circle engaged in ongoing communication and information sharing with Chinese regulators and banks. However, due to China’s stringent focus on financial security and the requirement for a third-party payment license to conduct payment operations, Circle’s business in China remained largely dormant, existing in name only.

On August 15, 2020, Tianjin Circle Technology Co., Ltd. applied for a simplified deregistration and was officially dissolved on September 7, 2020, marking Circle’s exit from China.

A Difficult Pivot: Acquiring a Crypto Exchange

In 2016, as Bitcoin’s development slowed amid forks and scaling debates, Circle’s founder Jeremy Allaire grew frustrated, noting in an interview, “Three years on, Bitcoin’s progress has significantly slowed.” By December, Circle announced it would abandon its Bitcoin trading business, retaining only fiat and Bitcoin transfer services while shifting focus to social payments

In 2017, Circle launched Circle Trade, an OTC service for institutional clients, and continued market-making for major exchanges, signaling a shift from payments to more lucrative ventures like cryptocurrency exchanges.

In 2018, Circle acquired the Poloniex exchange for $400 million, a deal led by its major shareholder IDG Capital, with $110 million in additional funding from Bitmain and others, valuing Circle at $3 billion.

Yet, the crypto bear market of 2018 proved brutal. By 2019, Circle’s valuation plummeted 75% to $705 million, Poloniex faced regulatory hurdles, delisting 15 tokens in the U.S. due to SEC concerns, and the company cut 10% of its workforce. But this still could not halt Poloniex’s decline, as its market share among compliant exchanges fell from nearly 60% in 2017 to just 1% by September 2019.

Facing a collapsing valuation and regulatory pressures, Circle made a drastic pivot in 2019.

It offloaded non-core businesses, shutting down Circle Pay by September, halting Circle Research, and selling Poloniex to an Asian investment group led by TRON’s Justin Sun, incurring a $156 million loss.

Circle Trade was sold to Kraken, and Circle Invest was divested to Voyager Digital in 2020.

Through a series of strategic divestitures, Circle slimmed down from a diversified cryptocurrency conglomerate into a focused issuer of the USDC stablecoin.

USDC: A Simple, Profitable Business Model

Circle’s transformation into the issuer of USDC, now with over $62 billion in circulation, has proven both strategic and lucrative. USDC is a fully reserved stablecoin, pegged 1:1 to the U.S. dollar and backed by cash and short-term U.S. Treasury securities.

Circle invests user-deposited funds primarily in these Treasuries, earning nearly risk-free returns from interest while maintaining liquidity for 1:1 redemptions.

Monthly transparency reports, attested by Grant Thornton and managed by BlackRock, ensure trust, with reserves held at institutions like The Bank of New York Mellon. In 2024, Circle reported $1.68 billion in revenue, driven largely by this model, which has fueled a 78% year-over-year growth in USDC circulation.

The total USDC supply can be divided into three parts: USDC held by Coinbase, USDC held by Circle, and USDC held by other platforms.

• Coinbase: Includes USDC held on Coinbase Prime and the exchange.

• Circle: Includes USDC held by Circle Mint.

• Other platforms: Includes USDC held on decentralized platforms such as Uniswap, Morpho, and Phantom.

According to Circle’s S-1 filing, the revenue-sharing agreement between Circle and Coinbase is as follows:

• USDC on Coinbase’s platform: Coinbase receives 100% of the reserve income.

• USDC on Circle’s platform: Coinbase receives 100% of the reserve income.

• USDC on non-Coinbase platforms: Coinbase and Circle each receive 50% of the reserve income.

Regulatory Landscape and Strategic Opportunities

The U.S. stablecoin legislation, the GENIUS Act, passed the Senate on May 21, 2025, and is now under House review, promising significant strategic benefits for Circle upon enactment.

The GENIUS Act aligns with Circle’s strengths, requiring stablecoins to be fully backed by U.S. dollar cash or Treasuries, mandating issuers to register with the federal government, disclose reserves monthly, comply with anti-money laundering laws, and prioritize holder redemptions in bankruptcy. This will legitimize compliant issuers like Circle, boosting trust in USDC among institutional and retail users.

By resolving regulatory uncertainties, the act will enable Circle to forge new partnerships with banks and payment providers, expanding USDC’s use cases and market share.

Looking ahead, Circle will play a pivotal role in advancing U.S. dollar globalization and supporting the Treasury market, cementing its IPO narrative as a global “dollar ambassador.”