The race for stablecoin dominance is accelerating within the global financial system. In June 2025, a landmark event took place: Circle Internet Group, the issuer of USD Coin (USDC), became the first major stablecoin company to go public on the New York Stock Exchange. This move marks a critical moment for both digital assets and traditional finance.
Stablecoins are blockchain-based digital currencies pegged to stable assets like fiat currencies. Among them, asset-backed stablecoins like USDC and USDT dominate the market, while algorithmic variants have been restricted in many jurisdictions due to systemic risks. In 2024, the total transaction volume of stablecoins reached $27.6 trillion, surpassing the combined annual transaction volume of Visa and Mastercard.
What Circle’s IPO Represents
Circle’s initial public offering (IPO) signifies a turning point for the crypto industry. The company went public under the ticker symbol CRCL, with shares priced between $27 and $28. On its first trading day, the stock closed at over $83, reflecting strong investor interest.
This event holds three major implications:
- Regulatory Recognition: Circle’s listing indicates growing regulatory acceptance. The company has secured licenses under Singapore’s Payment Services Act and the EU’s MiCA framework. Going public subjects it to stricter disclosure and governance standards.
- Extension of Sovereign Currency Systems: Circle’s business model resembles that of shadow banking. It generates revenue primarily by investing user-deposited dollars in money market funds and short-term treasuries, profiting from the interest rate spread.
- Financial Market Validation: Public listing allows traditional investors to price Circle’s business model. Its 2024 net profit stood at $157 million, largely dependent on high-interest-rate environments. A shift in monetary policy could challenge this model.
👉 Explore real-time market analysis
Inside Circle’s Business Model
Circle operates as a global fintech firm with a focus on digital dollar ecosystems. Alongside USDC, it also manages EURC, a euro-backed stablecoin. Through partnerships with firms like Visa, it is expanding into payment networks across Africa, Latin America, and the Middle East.
The company’s governance structure includes three share classes:
- Class A: Standard shares with one vote per share.
- Class B: Super-voting shares (five votes per share) held by founders.
- Class C: Non-voting shares for employee incentives.
Pre-IPO, founders Jeremy Allaire and Sean Neville controlled over 30% of voting rights. Major investors like BlackRock and Ark Invest also participated in the offering, signaling institutional confidence.
However, Circle faces governance risks, including centralized decision-making and potential conflicts of interest due to board members’ affiliations with other crypto firms like Coinbase.
Strengths and Vulnerabilities
Circle’s stability is backed by its full-reserve model—each USDC is purportedly backed 1:1 with cash and cash-equivalent assets. This has fostered trust among users and institutions.
Yet, the model has inherent vulnerabilities:
- Interest Rate Sensitivity: Profits are tied to the spread earned from reserve investments. A decline in interest rates could compress earnings.
- Market Concentration: USDC and Tether’s USDT form a duopoly. A loss of confidence in either could trigger system-wide instability.
- Regulatory Uncertainty: Although compliant in multiple jurisdictions, Circle lacks access to central banking safeguards like the Federal Reserve’s discount window.
How Stable Are Stablecoins?
A common misconception is that all stablecoins are equally stable. In reality, stability depends on structure, governance, and reserve management.
For instance, between May 28 and June 4, 2025, USDC traded within a tight range of $0.9992 to $0.9994—demonstrating strong peg stability. USDT, though trading slightly above $1, showed higher volatility during the same period.
These differences matter in practice:
- USDC is often preferred in decentralized finance (DeFi) for its predictability.
- USDT offers higher liquidity but may react more sharply to market sentiment.
True stability hinges on off-chain factors:
- Liquidity adequacy during mass redemption events.
- Legal frameworks across jurisdictions.
- Transparency in reserve auditing and governance.
👉 Get advanced financial insights
Regulatory Developments
Circle’s debut coincides with global regulatory advancements. The U.S. passed the GENIUS Act in May 2025, defining “payment stablecoins” and establishing federal oversight. Hong Kong also introduced a licensing regime for stablecoin issuers, emphasizing reserve backing and redemption compliance.
Asia-Pacific financial hubs like Singapore and Hong Kong are experimenting with regulatory sandboxes, allowing banks to integrate stablecoins into payment systems. These developments acknowledge stablecoins’ role in enhancing cross-border transaction efficiency.
Frequently Asked Questions
What is a stablecoin?
A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset like the U.S. dollar. They are commonly used for trading, remittances, and decentralized finance.
How does Circle make money?
Circle earns revenue through the interest rate spread on reserves backing USDC. These reserves are held in short-term Treasury bonds and other liquid assets. profitability is highly dependent on prevailing interest rates.
Are stablecoins safer than banks?
Not necessarily. Unlike bank deposits, stablecoins are not insured by government programs. Their stability relies on the issuer’s ability to maintain reserves and honor redemptions, especially during market stress.
What is the difference between USDC and USDT?
USDC is known for stronger peg stability and regulatory compliance, while USDT offers higher liquidity but has historically shown more volatility during crises.
Can stablecoins replace traditional payment systems?
They serve as a bridge between traditional finance and digital assets, offering faster and cheaper cross-border transactions. However, they are not yet fully integrated into national monetary systems.
What risks do stablecoin investors face?
Key risks include regulatory changes, reserve insolvency, loss of peg, and systemic market events. Users should assess issuers’ transparency and reserve backing before use.
Conclusion
Circle’s IPO represents a milestone in the integration of digital assets into mainstream finance. While it highlights the potential of stablecoins as monetary instruments, it also underscores their vulnerabilities—particularly their dependence on monetary policy and regulatory goodwill.
The stability of stablecoins ultimately depends on a combination of sound governance, transparent operations, and broader economic conditions. As regulatory frameworks evolve and market practices mature, stablecoins may play an increasingly pivotal role in the future of global finance.