On April 1, 2025, Circle Internet Financial submitted an S-1 prospectus to the U.S. Securities and Exchange Commission (SEC), which plans to list on the New York Stock Exchange under the stock code "CRCL". The company, with USDC stablecoin as its core, failed to try to go public through SPAC in 2022, and is now back in the public eye with clearer financial data and strategic goals. What is Circle's intention to go public? Can its financial situation support this step? What is unique about the business model? What does it mean for the crypto industry? By analyzing this prospectus, this article will answer these questions one by one and explore the internal logic of this stablecoin giant and its potential impact.

Part 1: Circle's financial portrait

1.1 The contradiction between revenue growth and profit decline

Circle's financial data show the dual appearance of growth and pressure. In 2024, total revenue and reserve revenue reached USD 1.676 billion, a year-on-year increase of 16%, a steady increase from USD 1.45 billion in 2023. However, net income fell from $268 million to $156 million, a 42% drop. Revenues have increased, but profits have decreased. What is hidden behind this?

Data shows that revenue growth is mainly driven by reserve revenue, with US$1.661 billion in 2024, accounting for 99% of total revenue. This is due to a significant increase in USDC circulation – as of March 2025, the circulation reached US$32 billion, a year-on-year increase of 36%. But the pressure on the cost side cannot be ignored. Distribution and transaction costs increased from $720 million to $1.011 billion, a 40% increase, and operating expenses also increased from $453 million to $492 million, of which general administrative expenses increased from $100 million to $137 million. The reason is that the income sharing agreement with Coinbase is an important factor, which will be discussed in detail later. I think this shows that although Circle's financial growth is impressive, its profit pressure is not small.

1.2 The Secret of Reserve Income

Reserve Income is the core pillar of Circle, reaching US$1.661 billion in 2024, accounting for the total99% of the income. This portion of the revenue comes from interest income managing USDC reserve assets. USDC is a stablecoin pegged to the US dollar, with every 1 USDC issued, with $1 support behind it. As of March 2025, $32 billion in circulation means equal reserve assets invested in low-risk instruments, including U.S. Treasury bonds (85% managed by BlackRock’s CircleReserveFund) and cash (10-20% deposited at global systemically important banks).

Taking 2024 as an example, assuming the average reserve size is $31 billion, the Treasury yield is 5.35% (US Treasury data), and the annualized interest is about $1.659 billion, almost consistent with the actual $1.661 billion. But an unexpected detail is that Circle needs to share the revenue equally with Coinbase. According to Decrypt, Coinbase took 50%, or $830.5 million, and Circle actually retained half of it. When I saw this share ratio, I understood why the net income was low. The stability of this part of revenue also depends on circulation and interest rates, which may bring risks if the Fed cuts in future interest rates or fluctuations in USDC demand.

1.3 Overview of Assets and Liquidity

Circle's asset structure focuses on liquidity and transparency. 85% of USDC reserves are invested in Treasury bonds, 10-20% are cash, deposited in top banks, and monthly public reports enhance trust. However, the company's own cash and short-term investment interest income was negative, with an estimated $34.712 million in 2024, which may be affected by management fees. Specific total assets and liabilities data are not fully disclosed in the existing information, but the robustness of reserve management is obvious. Circle has a solid financial foundation, but the impact of the external environment cannot be ignored.

Part 2: Deconstruction of Circle's business model

2.1 The core position of USDC

Circle's business is centered on USDC, and this stablecoin ranks second in the world. According to CoinGecko data, USDC has a circulation of $60.1 billion (probably different from S-1’s 32 billion due to the time difference), with a market share of about 26%, second only to USDT. It is widely used in payments, cross-border transfers (market size of 150 trillion US dollars) and de-ChinaXinhua Finance (DeFi) uses blockchain technology to achieve fast and low-cost transactions, which is better than traditional SWIFT systems.

USDC's advantages lie in compliance and transparency. It complies with the EU MiCA regulations (Aiying (Europe) business introduction), obtained French EMI license in July 2024, and the monthly reserve report is verified by the auditors, in contrast to the non-regulated USDT. Of the sources of income, 99% comes from reserve interest ($1.661 billion), with transaction fees and other revenues of only $15.169 million, accounting for a small proportion. This makes me feel that Circle is more like "saving money to earn interest" than charging mainly by service fees.

2.2 Diversification attempt

In addition to USDC, Circle is also developing digital wallets, cross-chain bridges (connecting different blockchains) and self-developed Layer 2 public chains, aiming to improve the usage scenarios and scalability of USDC. These businesses currently contribute limited revenue, including $15.169 million in other revenues. Nevertheless, they represent future growth potential, high investment in technology development may increase the cost burden in the short term.

2.3 The subtle relationship with Coinbase

Circle's relationship with Coinbase is quite dramatic. The two have co-founded CentreConsortium to manage USDC. In 2023, Circle acquired shares in Coinbase for $210 million in stock, holding Centre alone, but the revenue sharing agreement continues to this day. Coinbase split 50% of reserve revenue, resulting in a distribution cost of up to US$1.011 billion in 2024. This is not only the legacy of cooperation, but also a drag on profits. Whether the sharing of the share is worth paying attention to whether it will be adjusted in the future.

Part 3: Strategic Intent for Listing

3.1 Funding and Expansion

Circle's IPO is intended to raise funds, with a net amount of tentatively set to $X million (depending on the issue price), partly for the payment of RSU taxes, and the remaining investment in operating capital, product development and potential acquisitions. USDC has a market share of only 26%, well below Tether's 67%, and Circle obviously hopes to accelerate expansion through funding, such as pushing forwardLayer 2 Public chain and global market penetration.

3.2 Respond to regulation and enhance credibility

The United States' supervision of stablecoins is becoming increasingly strict. Circle moved its headquarters to the United States and chose to go public, and actively accepted the SEC's disclosure requirements. Disclosing financial and reserve data not only meets regulatory expectations, but also enhances institutional trust. I think this transparency strategy is quite clever in the crypto industry and may win more traditional financial partners for Circle.

3.3 Shareholders and liquidity

Circle's equity structure is divided into Class A (1 vote/share), Class B (5 votes/share, upper limit of 30%) and Class C (no voting rights), and the founder reserves control. Listing will also provide liquidity for early stage investors and employees, with secondary market transactions (valuation of $4-5 billion) already showing demand. An IPO is both a financing and a balanced move for shareholder returns.

Part 4: Implications for the crypto industry

4.1 Setting an industry benchmark

Circle's IPO has opened up a traditional exit path for crypto companies. In the past, ICOs and private equity were mainstream, but they had high risks and poor liquidity. Circle demonstrated the viability of public markets through IPOs, which could boost confidence in venture capital (VC), attract more money to crypto startups and drive the industry.

4.2 Possibilities of innovative gameplay

If Circle is successful, other companies may follow suit, such as quickly entering the market through SPAC or direct listing. Stock tokenization, trading on the blockchain, or combining it with DeFi (such as lending or staking) are potential new ways to play. I imagine that these patterns may blur the boundaries between tradition and crypto finance and bring new opportunities to investors.

4.3 Risks and Challenges

However, listing is not a smooth road. The recent downturn in the tech stock market (the worst quarter since Nasdaq since 2022) may push down pricing, and regulatory uncertainty (such as tightening of stablecoin legislation) poses a threat. CirThe success or failure of cle will test the resilience of crypto companies in traditional markets.

Conclusion

Circle's IPO demonstrates its financial strength (1.676 billion revenue), business ambitions (USDC+diversity) and industry ambitions. Reserve income is its lifeblood, but its share of share and interest rate dependence with Coinbase are hidden dangers. I think that if the listing is successful, Circle will not only consolidate its position in the stablecoin market, but may also open the door to traditional finance for the crypto industry and bring capital and technological innovation. From compliance to exit paths, Circle’s story is both a display of opportunities and a reminder of risks. At the intersection of crypto and traditional finance, its next step is worth looking forward to.