Stablecoin USDC issuer Circle is sprinting for an IPO again. The market may have various interpretations from the perspective of supervision, crypto ecosystem, and financial innovation, which will inevitably affect the competitive landscape of stablecoins and even the development of the entire crypto business.

1. Circle's business model

Circle's profit model for issuing USDC mainly revolves around reserve income, ecological cooperation and corporate services, while the equity of USDC holders is concentrated on asset security, liquidity and value-added opportunities.

(I) Circle's profit model

In terms of reserve income, Circle invests the US dollar reserves deposited by users in low-risk assets such as short-term US Treasury bonds and repurchase agreements, and achieves profitability through interest spreads. For example, as of March 2025, about 58% of USDC reserves were U.S. Treasury bond repurchase agreements and 42% were U.S. Treasury bonds, managed by BlackRock and publicly audited daily. This part of interest income is Circle's core source of profit. In 2024, Circle obtained US$1.7 billion in revenue through reserve assets, 50% of which are shared with Coinbase.

In terms of ecological cooperation, institutional users must pay a handling fee when minting or redeeming USDC through Circle Mint, and the rate is usually 0.1%-0.5%. USDC supports 16 blockchains (such as Ethereum and Solana). Circle charges transfer fees through cross-chain protocols (such as CCTP). The cross-chain transaction volume exceeds US$20 billion in 2024. In the lending and liquidity mining scenarios of USDC, such as Compound, Aave, Circle may share transaction fees with the agreement party.

In terms of enterprise services, Circle provides USDC custody and settlement services to banks and payment companies, such as cooperating with JPMorgan Chase to develop digital asset infrastructure. Circle's compliance tools (such as on-chain monitoring, KYC/AML systems) can be authorized to exchanges or enterprises to charge technical service fees. After Circle acquired Hashnote in 2025, it launched USYC (Tokenized Money Market Fund), providing institutions with an annualized return of 3.8%, while making profits through management fees. Circle expands USDC application scenarios through investment or cooperation, such as cooperating with ICE, a parent company on the New York Stock Exchange, to integrate USDC into derivative trading and clearing in traditional financial markets, and explore new sources of income.

(II) USDC holder rightsIn terms of asset security, USDC promises that each token will correspond to a reserve of USD 1. Users can redeem fiat currency through Circle or cooperative exchanges (such as Coinbase, Binance) at any time, and the reserves will be audited publicly every month to ensure transparency. In terms of liquidity, USDC is listed as the main trading pair by more than 90% of global exchanges (such as Coinbase and Binance), with an average daily trading volume of over US$5 billion. USDC has long been the top lock-in volume of liquidity pools on platforms such as Uniswap and Curve, and supports lending, liquidity mining and other scenarios. Users can earn profits by participating in the DeFi protocol. USDC can be used for cross-border payments (such as MoneyGram), supply chain finance (such as Stripe), and even included in banks' digital asset custody services.

In terms of value-added opportunities, users can deposit USDC into Circle Earn, BlockFi and other platforms to earn annualized interest of 1%-4%. USDC supports multi-chain parallelism, and users can transfer money between different blockchains at low cost through cross-chain bridges (such as Hop Protocol). Institutional users can integrate USDC payment functions through the Circle API to simplify cross-border settlement process.

(III) Safety and compliance

Security and compliance guarantee. USDC smart contracts have been audited by third parties (such as OpenZeppelin) and no major security vulnerabilities have occurred in history. Circle is regulated by New York DFS, EU MiCA, etc. to ensure that USDC complies with anti-money laundering (AML) and investor protection requirements and reduces risks. USDC reserves are stored in institutions such as Bank of New York Mellon, and some funds are insured in commercial insurance to further ensure the safety of assets.

USDC's compliance and reserve transparency make it a bridge connecting traditional finance and crypto markets. Traditional asset management companies such as Goldman Sachs and Fidelity support USDC custody to attract institutional investors to participate in the crypto market. Circle cooperates with central banks in multiple countries to study the application of USDC in CBDC pilots, such as cooperation with the Bank of Thailand's cross-border payments projects. USDC can be used as the valuation unit of securities tokens. For example, ICE plans to use USDC for bond and derivative transactions to improve settlement efficiency.

2. How to view Circle listing

Some people believe that Circle listing is a microcosm of the crypto industry's transformation from "edge speculative products" to "mainstream infrastructure". This transformation is affected by the interweaving of multiple factors, including regulatory certainty, namely US stablecoin legislation and global cooperationThe implementation progress of the regulation framework; technical iteration, namely, breakthroughs in cross-chain interoperability, privacy protection and scalability; ecological collaboration, namely, in-depth integration with traditional financial institutions, DeFi protocols and enterprise users. Although Circle is regarded as a weather vane for "compliance in the crypto industry", it has hidden concerns about USDC's excessive dependence, regulatory changes and market volatility risks. In the long run, if it operates stably, stablecoins will become the infrastructure of the global financial system, and Circle is expected to replicate Visa's market value growth path; on the contrary, if supervision becomes stricter or the technical route is blocked, its valuation may be further under pressure, which can be said to coexist with strategic opportunities and multiple challenges.

(I) USDC market position and strategic adjustment

Circle's core assets are USDC, a stablecoin pegged to the US dollar, with circulation reaching US$60 billion as of March 2025, accounting for about 35% of the global stablecoin market, second only to Tether's USDT (about 45%). Compared with USDT, USDC's relative advantages lie in compliance and reserve transparency, that is, its reserves are composed of 80% short-term US Treasury bonds and 20% global systemically important bank cash, and are disclosed in real time through third-party audits, which makes it the first choice for traditional institutional investors. For example, Stripe, BlackRock and other companies use USDC for cross-border payments and asset custody.

Circle has gradually transferred non-core assets such as exchange business and social payment business in recent years, focusing on USDC issuance and blockchain infrastructure (such as cross-chain protocol CCTP). Although it strengthens the main business of stablecoin, it also leads to a single income structure - USDC contributes about 80% of the company's revenue, while interest income (reserve investment income) accounts for more than 90%.

Circle is the second listed crypto-native enterprise after Coinbase, but its business focuses more on the infrastructure layer than on the trading platform. This may attract more stablecoin issuers (such as Tether, Paxos) and DeFi protocols (such as Aave, Uniswap) developers to seek listings, pushing the industry to shift from "speculative-driven" to "compliance value-driven".

(II) Circle opportunities and challenges coexist

Circle clearly reminds in its IPO documents that if USDC is classified as a securities, it may face registration and disclosure obligations under the Securities Law, and may even be prohibited from trading. This risk stems from the SEC's "Ouvian test" of crypto assets. If USDC is recognized as an "investment contract", it will have a disruptive impact on its business model.

As a listed company in the future, Circle will need to comply with the SEC's strict disclosure requirements, including reserve composition, smart contract audits, anti-money laundering (AML) measures, etc. In addition, the EU MiCA Act requires stablecoin issuers to deposit 30%-60% of their reserves in cash in the form of EU banks, which may reduce their interest income (an estimated reduction of about 15% profit margin) and increase the risk of dependence on the banking system.

But Circle is optimistic about the adoption of the US "Pay Stablecoin Act", believing that legislation will clear obstacles for traditional institutions such as banks and asset management companies to enter the crypto field. If the bill is implemented, USDC may become the first stablecoins to obtain federal licenses, further consolidating its market position.

(III) Key dimensions that investors need to pay attention to

In the future, the market needs to pay attention to whether the proportion of US Treasury bonds in Circle's financial report continues to be >40%; monitor the daily trading volume ranking of USDC on platforms such as Uniswap (currently second only to USDT); the results of the annual review of Circle by DFS in New York (such as rating of "A" in 2024).

3. Comparison of several major stablecoins USDC, USDT, and DAI

Stablecoins are cryptocurrencies that anchor specific value (such as USD) through algorithms or collateral assets (such as fiat currency assets, cryptocurrency assets, etc.), aiming to reduce the price volatility of traditional cryptocurrencies.

For crypto business, as the "stable anchor" of the crypto market, stablecoins help investors quickly complete asset exchanges and reduce transaction slippage; at the same time, they provide a stable value foundation for financial applications such as decentralized lending and derivatives, and promote innovation in complex financial products; when cryptocurrencies fluctuate violently, users can convert assets into stablecoins to hedge risks and enhance market resilience.

For traditional finance, a stablecoin that can be based on blockchain can be realized现低成本、实时跨境转账，挑战传统银行电汇模式；二可通过数字钱包覆盖无银行账户群体，降低金融服务门槛；三是其中心化与去中心化并存的特性，促使监管机构完善数字货币合规框架，平衡创新与风险。

Stablecoins not only solve the volatility pain points of the crypto market, but also provide a test site for digital transformation for the traditional financial system. The previous article has introduced USDC, and here we will introduce two other stablecoins USDT and DAI.

（一）USDT

USDT（Tether）可能是全球发行最早、目前流通量最大的美元稳定币，由Tether Limited于2014年推出，锚定美元汇率（1:1），主要用于加密货币市场资金结算和价值存储。

USDT issuance and redemption through Tether, and was questioned in the early stage due to insufficient transparency in reserves. Although Tether claimed that each USDT was backed by 100% USDT, an investigation by the New York Attorney General's Office found that its reserves contained non-cash assets such as commercial paper, and eventually reached a fine agreement. At present, USDT is gradually improving transparency and publishing reserve reports regularly.

USDT was originally issued based on the Bitcoin Omni Layer protocol, and later expanded to mainstream public chains such as Ethereum, TRON, and Solana, supporting multi-chain parallelism. Its smart contract does not mandatory third-party audits, and its technical security relies on Tether's risk control capabilities. It has historically suffered asset losses due to private key leakage. In the early days, USDT was separated from strict supervision. In recent years, it gradually strengthened compliance construction and cooperated with institutions such as DFS in New York, but it still faced regulatory reviews in multiple countries. The centralized operation model is in conflict with the traditional financial system, and some institutions restrict the use of USDT due to compliance risks.

USDT is the most liquid stablecoin in the cryptocurrency market, with a long-term average daily trading volume and is supported by more than 90% of global exchanges. It deeply embedded in spot and derivative trading scenarios, especially in emerging markets, it assumes the function of fiat currency channel. USDT is widely used in the DeFi field and supports lending, liquidity mining and other scenarios, but its decentralization is lower than that of DAI. It is deeply bound to centralized exchanges and has become the de facto "dollar substitute" in the crypto market.

(II) DAI

DAI is an algorithm stable launched by the Decentralized Autonomous Organization (DAO) MakerDAO in 2017Fixed currency, anchored the US dollar exchange rate (1:1), and operated based on the Ethereum blockchain. The core goal is to achieve stable value through a completely decentralized mechanism.

DAI adopts an over-collateralized model, and users need to deposit crypto assets such as ETH and WBTC (the mortgage rate is usually ≥150%) to generate DAI. Stability is achieved through algorithmic adjustment of "stability fees" and mortgage rates. The governance is made by the MakerDAO community through smart contract voting and is controlled by no centralized institutions. DAI通过跨链技术（如Polygon、Arbitrum）逐步扩展应用场景，但因抵押品依赖加密资产且缺乏法币储备，难以直接对接传统金融机构的托管、结算需求。

DAI依赖以太坊智能合约，代码开源且经过第三方审计（如OpenZeppelin），但历史上曾因闪电贷攻击、预言机漏洞等引发风险事件。 Its fully on-chain operation feature protects it from centralized risks such as private key leakage. DAI is deeply integrated into the DeFi ecosystem, supporting scenarios such as lending (Compound, Aave), decentralized transactions (Uniswap), cross-chain bridges (Hop Protocol), and long-term locked positions in the DeFi protocol. However, liquidity in centralized exchanges is weak, and trading volume is significantly lower than that of USDC and USDT.

DAI, as a decentralized stablecoin, is not directly under the jurisdiction of traditional financial regulators, but faces potential compliance risks. Partially, it is considered crypto assets, comply with anti-money laundering (AML) and investor suitability requirements, and is less compatible with the traditional financial system.

DAI takes "no trust" as its core advantage and achieves stability through algorithms and community governance, becoming the infrastructure of decentralized finance. However, crypto collateral price fluctuations, governance decision-making efficiency and regulatory uncertainty remain their main challenges. For traditional financial institutions, the decentralized nature of DAI may limit its compliance use, but it has unique value when exploring blockchain native financial services.

4. After Circle is listed, how should you choose a stablecoin?

综合来看，若用户对去中心化有强需求，DAI仍是首选；若追求极致流动性，USDT可作为补充，但需控制持仓比例（建议<20%）。

For institutional compliance industries such as cross-border payments and custody, USDC is the first choice because of its reserves.Transparent, regulatory recognition, and deeply integrated with traditional financial infrastructure after Circle went public.

For high-frequency trading and arbitrage such as cryptocurrency exchanges, USDT is still the first choice, but its compliance risks need to be hedged through diversified holdings (such as paired with USDC).

For DeFi native needs such as lending and liquidity mining, DAI has become the first choice, but positions need to be controlled and collateral risks are paid attention to.

For emerging markets such as Southeast Asia and the Middle East, USDT and USDC are in parallel with dual tracks, using USDT's liquidity to cover the gray market, and USDC enters compliance scenarios. (Circle prospectus: https://www.sec.gov/Archives/edgar/data/1876042/000119312525070481/d737521ds1.htm#toc)

Zhang Feng, partner of Wanshang Tianqin Law Firm, deputy secretary-general of the Intellectual Property Professional Committee of the Shanghai Outstanding Contribution Experts Association, deputy director of the Supervision Committee of the Hong Kong RWA Global Industry Alliance (Preparation) , expert in think tanks and technology evaluation experts of the Shanghai Blockchain Technology Association, standing member of the Artificial Intelligence and Metaverse Industry Working Committee of the Mobile Communications Federation, member of the Security Governance Committee of the Artificial Intelligence Industry Alliance, and expert in compliance with the national chain data element.