Circle Internet Financial, the leading US crypto company that issues Stablecoin USD Coin, filed long-term paperwork on Tuesday for its first public offer. The 225-page financial disclosure includes previously unreported insights into one of the world’s largest crypto companies, showing the large presence of circles in the booming stubcoin space and risk factors that could make investors pause before an IPO.
Founded in 2013, Circle has previously tried to publish it, and according to S-1 filing, it failed to have a SPAC contract that exceeded $44 million in 2022. However, thanks to the support of President Donald Trump, the circle hopes the second time will be attractive, boasting more than $1.6 billion in 2024.
Although this document does not lay out the timeline for the circle’s public offering plan, company stocks usually start trading within a few weeks of filing an S-1. Fortune previously reported that FinTech, which is scheduled to trade under Ticker CRCL, is working with investment banks JP Morgan Chase and Citi on its IPO. Here are some important points from the S-1 filing:
When Jeremy Allaire and Sean Neville co-founded the circle in the early days of the blockchain industry, they intended the company to disrupt payment space and launch a variety of products, including crypto exchanges and Venmo-type services. Around 2018, the company began to focus entirely on Stablecoins, a kind of cryptocurrency that is fixed to underlying assets, such as US dollars, gold and oil.
Circle’s Stablecoin USDC exploded in popularity at the last Crypto Bull Market, rising from its market capitalization of less than $1 billion in 2020 to $50 billion, exceeding $50 billion in 2022. Because USDC is supported by dollar-like assets such as the US Treasury Department, Circle earns significant profits from interest generated by maintaining Reserves rather than maintaining Reserves. These returns still represent the majority of the circle’s revenue. According to the S-1, more than 99% of Circle’s $1.688 billion revenue from 2024 comes from reserve income, with only $15 million being supplied from other sources.
This means that circles rely heavily on a single revenue stream. In S-1, Circle estimated that a 1% reduction in interest rates could result in a $441 million reduction in Stablecoin reserve income. However, the circle argued that lower interest rates could lead to an increase in USDC as investors rely on different financial strategies. “The relationship between USDC in interest rates and distribution is complex, extremely uncertain and unproven,” reads Filing.
The Circle originally envisioned USDC as a partnership between different crypto companies and traditional financial institutions, creating a consortium called the Centre, which helps manage and issue Stablecoin. However, there was only one other participant at the center. This is the main crypto exchange Coinbase. In 2023, Circle and Coinbase Shutter Center remained partners at USDC.
A new disclosure from S-1 reveals how the partnership changed in 2023, with Coinbase taking a small number of stakes in Circle. Prior to the new agreement, Circle and Coinbase shared revenue generated from USDC reserves based on the amounts distributed and held by each company. However, under the new terms, payments are divided more evenly based on total reserve income, but divided by how much each company’s wallet and custody products hold.
Last December, Circle also announced a partnership with Top Crypto Exchange Binance to promote USDC adoption and to retain Stablecoin as the company’s Treasury Department. According to S-1, Circle not only paid Binance a one-off fee of $60.25 million for the partnership, but also agreed to pay a monthly fee representing Binance and its Treasury USDC percentage.
USDC’s market capitalization has exploded over the past year, doubling from about $30 billion to $60 billion, but facing a busy market. In addition to its main rival, Offshore Tether, the Offshore Tether, which boasts a market capitalization of over $140 billion, lists many other competitors for the S-1. This includes PayPal, which launched its own Stablecoin in 2023, and bank giants like JP Morgan, which is exploring blockchain space.
Still, the circle is looking at bullish conditions this week, including the passage of this week’s bill, including the passage of stationary laws in the US after the Senate Banking Committee advanced the bill in March. The house is scheduled to vote for that version this week. However, they were only able to invite more players into the space.
Allaire, CFO Jeremy Fox-Geen and more than 10 other executives will be reaping millions of millions from Circle’s upcoming IPOs. However, the real winners are circle investors who hold more than 5% of the company’s shares. These include general Catalyst for venture capital companies. It owns the largest number of the largest corporate holders. Beijing-based venture company IDG Capital isn’t too late. Other major VCs set up to win cash at the Circle IPO are Breyer Capital, Accel, and Oak Investment Partners. Fidelity, an investment bank with increasingly crypto-depthing toes, is also a major owner.
Collectively, the circle’s biggest investors are the Stablecoin giants with over 130 million shares. The initial filing did not include details on how much the circle is targeting to source through the IPO, but it says the IPO is aiming to value between $4-5 billion.
Circle executives make quite a penny. Naturally, Allaire is the most compensated and has a total compensation package of over $12 million. This is $900,000 base salary, $9 million shares and other benefits in addition to $2 million.
CFO Jeremy Fox-Geen is the second-most compensated executive with a take-out salary of $5.2 million. This is a benefit of $500,000 on base salary, $4 million in stocks and $700,000 other. The top executives will be concluded with Elizabeth Carpenter, President and Chief Justice Officer Heath Tarbert, and Chief Product and Technology Officer Nikhil Chanduk. They all make between $4-5 million, according to SEC filings.
This story was originally featured on Fortune.com.
