Last week, in the middle of one of the worst stretches in Wall Street history, Circle filed its S-1 to go public.
You’d be forgiven if you missed it, but this is a good bellwether for the future of stablecoins — and by extension the architecture of the next financial system.
I dug into their S-1 this weekend. What I found was a business with real reach and growing revenue — but also deep fragility, concentrated exposure, and some tough product questions ahead.
My TL;DR? I want Circle to win. But I’m not willing to personally put my money here yet.
The Case for Circle
1) Revenue is rising
Circle reported $1.68B in total revenue for 2024, up from $1.45B in 2023, and $772M in 2022. That’s a strong topline growth story. They’re clearly benefiting from USDC’s scale and the high-rate environment.
2) Massive footprint
USDC is live on 19+ blockchains (S-1, p.93), and Circle’s Cross-Chain Transfer Protocol (CCTP) gives it a trust-minimized way to move stablecoins across chains. That makes USDC the most infrastructure-complete stablecoin in the market.
3) Global scale and partners
Through partnerships with Coinbase and Binance, Circle helped scale USDC to $58B in circulation at its 2022 peak. Even after redemptions, Circle has consistently handled tens of billions in daily liquidity without drama—a rare feat in crypto.
4) Optionality on expansion
They’ve launched Euro Coin (EURC) and developer APIs to reduce dependence on USDC’s dollar float. These are still small (EURC revenue is negligible per p.60), but they hint at a broader ambition to tackle FX and embedded payments long-term.
The Cracks Beneath the Surface
Despite the top-line story, Circle’s S-1 reveals a business that looks less like tech (e.g. Stripe or PayPal) and more like a yield vehicle.
1) 99% of revenue is from interest on reserves
Circle made $1.63B of its $1.68B revenue in 2024 from interest income on USDC reserves (S-1, p.60). That’s over 97% of total revenue, and virtually all of its profit. They cite 1% drop in interest rates would slash $441M in annual income (S-1, p.48). If you look at all of the growth from 2022-2024, the majority came from rate hikes over asset growth
2) Gross margins are structurally capped
Circle’s gross margin was ~39%, but net take after partner rev shares makes it feel closer to a ~30% business. A staggering $1.14B of 2024 revenue went to distribution partners (S-1, p.73), with Coinbase alone receiving 50% of USDC interest (p.76), likely through 2026.
For comparison PayPal’s margin is ~45%, Stripe’s is estimated at ~60%, and Coinbase is ~75% (due to having a thriving trading business as well).
3) Competitive risk is real and rising
PayPal has already launched PYUSD. Tradfi is coming, Tether is coming to the US, and even Trump launched his own stablecoin! Issuing a fiat-backed stable is no longer technically hard. The moats are distribution and trust—and Circle doesn’t have unique leverage on either.
If this trend, accelerated by pending Congressional legislation, Circle needs to have a more significant product and/or distribution moat, or else risk significant margin compression and share erosion.
4) Product-market duality is unresolved
Circle serves both large institutions and DeFi-native developers. But their track record skews enterprise. They exited their consumer business back in the Voyager era, and their leadership hails from Brightcove—an enterprise video platform I remember well from my startup days.
That orientation matters. It suggests Circle will default to slow-moving enterprise deals, which is at odds with the fast iteration cycles required to win in DeFi and embedded finance. The S-1 (p.95) even flags ‘diverse customer segments’ as a risk. As someone developing directly on their stack, I can confirm: the DevX lags far behind Stripe and others. It would need significant focus & investment to be competitive.
5) Valuation is way too steep
The IPO target is $4–5B, which is ~2.5–3x revenue or ~30x trailing P/E (!!)
Compare this to PayPal that which trades at 1.8x revenue and ~17x P/E; or compare to Coinbase, which trades at 3x forward revenue and ~12x P/E who have a counter-cyclical trading business that benefits when interest revenue drops.
Circle has no diversification. If rates fall, revenue and margin collapse in tandem.
My Recommendation: Wait.
As someone working on a venture that is betting on stablecoins, I want Circle to succeed. But, personally I’m going to wait on investing in Circle directly until:
• We see more revenue from EURC, APIs, or ecosystem services
• Circle shows stronger DevX tooling and docs
• They find other methods of proprietary distribution
• More broadly, we have better clarity on macro conditions and where rates are headed
Until then, Circle is effectively a money market with an API, and not a tech business. And if recent events indicate that we’ll be entering a falling-rate world, that’s not where I’d want to be.