Original title: Circle Goes Public: CRCL Valuation the Economics of USDC
Original article by: Tanay Ved
Original translation: johyyn, BlockBeats
Editors Note: The author analyzes Circles recent market value fluctuations, USDCs revenue structure and partnerships. The background of this article is that the passage of the GENIUS Act has triggered the markets renewed attention to the stablecoin track. Circles market value once exceeded US$63 billion, exceeding the total value of the USDC it issued. The author analyzes Circles current revenue structure, partnership with Coinbase and cost structure through on-chain data and public documents, and points out the sustainability pressure and growth concerns behind its high valuation, especially in the context of falling interest rates and intensified competition, and warns and prospects for the diversification of its business model.
The following is the original content (for easier reading and understanding, the original content has been reorganized):
Key points:
1. Circles market value has skyrocketed but its valuation is high: The passage of the GENIUS Act has pushed Circles market value to $63 billion, which now exceeds the value of USDC in circulation. However, based on its valuation of about 37 times its revenue in the past 12 months and about 401 times its net profit, it is increasingly out of touch with its fundamentals.
2. Coinbase is a core partner and a major cost: In 2024, Coinbase received approximately 56% of USDC reserve revenue, which became a major distribution cost for Circle. Nevertheless, the partnership between the two parties is still critical to expanding the scale of USDC through Coinbases products and ecosystem.
3. Reserve income will grow, but the share ratio is limited: According to on-chain data and public documents, Circles USDC reserve income may grow from US$1.6 billion in 2024 to more than US$9 billion in 2029. However, under the current revenue sharing terms, Circle may only be able to retain less than half of the amount, which highlights the importance of expanding revenue sources beyond reserves.
4. Growth depends on scale expansion and market share competition under downward interest rates: With interest rates expected to fall, Circles long-term revenue potential depends critically on expanding the supply of USDC and increasing market share amid increasingly fierce competition from newly approved issuers.
introduction
Stablecoins are having a breakout moment, and Circle is in the spotlight. Circle Internet Group, the issuer of the US stablecoin USDC (the second largest stablecoin with a market cap of about $61 billion and a 25% market share), went public on the New York Stock Exchange (NYSE) on June 5. Since then, CRCLs stock price has soared more than 700% from its initial public offering (IPO) price of $31 per share to about $263 per share. At a market cap of $63 billion, Circle is currently valued higher than the USDC it issues (the size of its reserves).
Circles IPO comes at a perfect time, spurred by the passage of the GENIUS Act by the U.S. Senate. Combined with the growing demand for compliant digital dollars, Circle is taking advantage of the markets strong interest in pure stablecoin exposure. Its strong debut performance has also ignited market interest in IPOs of other crypto companies (such as Bullish and Gemini Exchange), while spurring increased public market activity and renewed attention to the economics of stablecoins.
In this edition of the Coin Metrics Network State of the Year report, we analyze Circle’s post-IPO performance and valuation, dissect who is capturing the economic value of USDC, and forecast Circle’s future revenue potential based on interest rates, USDC adoption, and the competitive landscape of the stablecoin market.
Circle (CRCL) Performance
Circles IPO was one of the most high-profile U.S. tech IPOs in recent years. The offering was oversubscribed by more than 25 times, with the stock opening well above the IPO price of $31. Even as the broader crypto market pulled back, CRCLs stock price continued to rise against the trend, pushing Circles market value to $63 billion.
Valuation Standards
But does such a high valuation justify the companys fundamentals? Based on Circles total revenue of $1.67 billion and net profit of $157 million in 2024, $CRCL is currently trading at about 37 times the revenue of the past twelve months (price-to-sales ratio, P/S) and 401 times the net profit (price-to-earnings ratio, P/E). These multiples far exceed comparable fintech companies such as NuBank (about 27 times), Robinhood (about 45 times), and even Coinbase (about 57 times), which has a more diversified revenue source and higher profit margins.
Multiple factors appear to be converging to drive this premium. Circle offers the public direct access to digital dollar growth, benefiting both from the GENIUS Act and from its first-mover advantage in regulated markets. USDC and Circle are well-positioned to benefit as the addressable market expands. However, at a $65 billion market cap, narrative-driven enthusiasm appears to be outpacing the underlying fundamentals. Key risks include heavy reliance on interest income, which could be compressed if U.S. interest rates fall, and increasing competition from banks and fintechs (the GENIUS Act paves the way for more regulated stablecoin issuers with similar business models).
Who captures the economic value of USDC?
Circle generates almost all of its revenue from interest income generated by its USDC reserves. These reserves are held in cash at banks and in the Circle Reserve Fund managed by BlackRock, which invests in short-term U.S. Treasuries. At the end of 2024, Circle generated $1.6 billion in gross income on $44 billion in reserves, which translates to an effective reserve yield of about 3.6%. However, after paying more than $900 million in distribution costs (mostly to Coinbase), Circle retained $768 million in net income on its USDC business.
Circle and Coinbase revenue sharing
Although Circle remains the sole issuer of USDC, it does not capture all of its value. Through its equity in Circle and its revenue-sharing agreement with it, Coinbase earns:
1. 100% interest income generated by USDC held by customers through the Coinbase platform;
2. 50% interest income generated by USDC held by customers elsewhere.
Based on this arrangement, both parties are motivated to expand the adoption of USDC. Coinbase has played a vital role in driving the growth of USDC, significantly increasing the distribution of USDC through its exchange, the Base Layer-2 network (which currently carries $37 billion in USDC), and new products such as Coinbase Payments. According to Circles S-1 filing, Coinbases share of USDC has steadily increased, from about 5% in 2022 to 12% in 2023, and then to 20% in 2024. As of the first quarter of 2025, this share accounts for 22% of the total supply, which means that its various platforms hold a total of $12 billion in USDC.
The following diagram illustrates the distribution flow of funds generated by USDC between Circle and Coinbase in 2024. The USDC reserve income shared by Coinbase is considered as Circles cost expenditure, which clearly reflects the operating mechanism of how value flows from USDC reserves to Circle and is ultimately distributed to Coinbase through the revenue sharing agreement between the two parties.
Based on the above projections, Coinbase has captured over 50% of Circle’s total USDC revenue, driven by the continued growth of USDC held on the platform. Although stablecoin revenue only accounts for about 23% of Coinbase’s total revenue, and part of the proceeds are returned to users through “USDC rewards”, the company still retains considerable upside. This interdependent economic relationship raises an important question: Given that Circle’s market capitalization has reached 82% of Coinbase’s, how should investors benchmark the two companies relative to each other?
Looking ahead to forecast USDC interest income
Looking ahead, Circle’s revenue trajectory depends on three key variables: the supply of USDC in circulation (influenced by overall stablecoin market growth and its market share), prevailing interest rates, and the share of USDC held by Coinbase.
While USDC’s historical supply growth provides a useful benchmark, forecasting future supply growth is inherently uncertain. The actual impact of regulatory clarity, evolving competition, and the true role of macroeconomic conditions could significantly impact stablecoin adoption and market share. Given this, we modeled a gradual slowdown in growth—incorporating both short-term tailwinds (such as stablecoin legislation) and longer-term headwinds from increased competition and declining yields.
To better understand the long-term economic model of USDC, we modeled the net revenue of both Circle and Coinbase by 2029 based on these core elements.
In summary, the long-term revenue potential of Circle and Coinbase is closely related to the expansion of USDC supply and the maintenance of market share, which will help hedge the adverse effects of the downward trend in yields. It is expected that by the end of 2025, the total reserve income generated by USDC is expected to reach US$2.44 billion, of which Coinbase will benefit from approximately US$1.5 billion and Circle will benefit from approximately US$940 million.
If current market dynamics continue, this revenue could rise to $9.15 billion by 2029, with Coinbase receiving $5.99 billion and Circle receiving $3.16 billion.
It is important to note that this estimate only covers USDC reserve revenue, which currently accounts for the vast majority of Circle’s revenue, and does not include potential upside from emerging business lines such as the Circle Payments Network, which may play an increasingly important role in diversifying revenue in the future.
in conclusion
Circles IPO marks an important milestone in the stablecoin industry, providing investors with an opportunity to directly participate in the growth of the digital dollar. In the near term, regulatory momentum and Circles positioning in the compliant market provide favorable support; however, its long-term growth prospects still depend on the expansion of USDC supply, market share, and the diversification of its revenue structure to non-reserve sources.
The current valuation multiples of CRCL are significantly higher than the fundamentals. Whether it can transform regulatory clarity, institutional partnerships and distribution capabilities into lasting and sustainable growth momentum in the future will be the key.
This article is from a contribution and does not represent the views of BlockBeats
