Circle Goes Public: CRCL Valuation & the Economics of USDC
Inside Circle’s IPO, USDC economics, and long-term revenue outlook
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Circle Goes Public: CRCL Valuation & the Economics of USDC
By: Tanay Ved
Key Takeaways:
Circle’s market cap has surged to $63B, propelled by the passage of the GENIUS Act and now exceeds the value of USDC in circulation. But at ~37x trailing revenue and ~401x net income, its valuation appears increasingly detached from underlying fundamentals.
Coinbase earned ~56% of USDC reserve revenue in 2024, making it a major distribution cost for Circle. However, the partnership remains central to scaling USDC through Coinbase’s products and ecosystem.
Based on projections from on-chain data and public filings, Circle’s USDC reserve income could grow from $1.6B in 2024 to over $9B by 2029. But under current revenue-sharing terms, Circle may retain less than half of that amount, highlighting the importance of diversifying beyond reserve-based revenue.
With interest rates projected to decline, Circle’s long-term revenue potential hinges on expanding USDC supply, and growing market share amid intensifying competition from new regulated issuers.
Introduction
Stablecoins are having a breakout moment, and Circle is in the limelight. Circle Internet Group, the issuer of USDC (the second-largest stablecoin with a market cap of ~61B and a 25% market share), made its public debut on the NYSE on June 5th. Since then, shares of CRCL have skyrocketed more than 700% from an IPO price of $31/share to ~$263. At a $63B market capitalization, Circle is now valued higher than the USDC it issues.
Circle’s IPO comes at an opportune time, boosted by the passage of the GENIUS Act in the U.S. Senate. Combined with growing demand for compliant digital dollars, Circle is capitalizing on the market’s appetite for pure-play stablecoin exposure. Its strong debut has also ignited a wave of crypto IPO interest from exchanges like Bullish and Gemini, alongside increased activity in public markets and renewed focus on the economics of stablecoins.
In this issue of Coin Metrics’ State of the Network, we analyze Circle’s post-IPO performance and valuation, break down who captures the economic value of USDC, and project Circle’s future revenue potential based on interest rates, USDC adoption, and competitive dynamics of the stablecoin market.
Circle (CRCL) Performance
Circle's IPO was among the most explosive U.S. tech IPOs in recent years. The offering was oversubscribed by over 25x, with shares opening well above the $31 IPO price. CRCL shares have continued to defy gravity even as the broader crypto market experiences a pull-back, pushing Circle’s market capitalization to $63B.
Source: Coin Metrics Hourly Reference Rates, Google Finance
Valuation Benchmarks
But does this lofty valuation align with the company's fundamentals? Based on Circle’s 2024 gross revenue of $1.67B and net income of $157M, $CRCL is currently trading at ~37x trailing revenue (P/S) and ~401x trailing net income (P/E). These multiples far exceed comparable fintechs like NuBank (~27x), Robinhood (~45x) and even Coinbase (~57x), which have more diversified revenue streams and higher margins.
A confluence of factors appears to be driving this premium. Circle offers direct public market exposure to the growth of digital dollars, buoyed by the GENIUS Act and a first-mover advantage in regulated markets. As the addressable market expands, USDC and Circle are well-positioned to benefit. Still, with a $65B market cap, narrative-driven enthusiasm appears to be outpacing underlying fundamentals. Key risks include heavy reliance on interest income, which could compress if U.S. interest rates fall, and rising competition from banks and fintechs, as the GENIUS Act paves the way for more regulated stablecoin issuers with similar business models.
Who Captures USDC’s Economic Value?
Circle earns nearly all of its revenue from interest income on USDC reserves, held in cash at banks and in the BlackRock Circle Reserve Fund, which invests in short-term U.S. Treasuries. Circle generated $1.6B in gross revenue on $44B in reserves at the end of 2024, implying an effective reserve yield of about 3.6%. However, after paying out more than $900M in distribution costs, primarily to Coinbase, Circle retained $768M in net USDC revenues.
Circle & Coinbase Revenue Sharing
While Circle remains the sole issuer of USDC, it doesn’t capture all of the value. With an equity stake and a revenue sharing agreement with Circle, Coinbase earns:
100% of interest-income on USDC held in Coinbase products
50% of interest-income on USDC held elsewhere
As a result of this arrangement, both parties are incentivized to scale USDC adoption. Coinbase has played a vital role in USDC’s growth, boosting distribution via its exchange, the Base Layer-2 network (now home to $3.7B in USDC), and other products like the newly launched Coinbase Payments. Coinbase’s share of USDC supply has grown steadily, from ~5% in 2022 to 12% in 2023, and 20% in 2024 according to Circle’s S-1, reaching 22% of total supply by Q1 2025, or $12B held across its platforms.
The diagram below illustrates how revenue generated on USDC flowed between Circle and Coinbase in 2024. This approach views Coinbase’s share of USDC reserve revenue as a cost to Circle, reflecting how value flows from USDC reserves to Circle and is ultimately shared with Coinbase under their revenue agreement.
Based on these projections, Coinbase captures over 50% of Circle’s gross USDC revenue driven by a growing share of USDC held on its platform. While stablecoin income accounts for roughly 23% of Coinbase’s total revenue and some is passed on to users via “USDC Rewards,” the company still retains meaningful upside. These intertwined economics raise important questions about how investors should benchmark Circle and Coinbase relative to each other, especially given that Circle’s market cap is now 82% of Coinbase.
Projecting Interest Income From USDC
Looking ahead, Circle’s revenue trajectory hinges on three key variables: USDC supply in circulation (influenced by overall stablecoin growth and its market share), prevailing interest-rates, and the share of USDC held on Coinbase.
Source: Coin Metrics Network Data Pro
While USDC’s historical supply growth offers a useful baseline, projecting future supply growth is inherently uncertain. The true impact of regulatory clarity, competitive dynamics, and macroeconomic conditions could meaningfully affect adoption and market share. Given this, we model a declining growth path that reflects near-term tailwinds (like stablecoin legislation) while incorporating longer-term headwinds from rising competition and falling yields.
Source: Coin Metrics Network Data Pro
To better understand the long-term economics of USDC, we projected net revenues for Circle and Coinbase through 2029 based on these variables.
As the tables show, the long-term revenue potential for both Circle and Coinbase is closely tied to scaling USDC supply and preserving market share, which help offset the impact of declining yields. By the end of 2025, total reserve income from USDC could reach $2.44B, with $1.5B accruing to Coinbase and $940M to Circle. If current dynamics persist, those figures could climb to $9.15B, with $5.99B to Coinbase and $3.16B to Circle by 2029.
These estimates focus solely on USDC reserve income, which accounts for the vast majority of Circle’s revenue. They do not include potential upside from emerging business lines like Circle Payments Network, which may play a growing role in diversifying revenues going forward.
Conclusion
Circle’s IPO marks a major milestone for the stablecoin sector, offering investors direct exposure to the growth of digital dollars. While regulatory momentum and Circle’s positioning in compliant markets provide near-term tailwinds, the company’s long term outlook hinges on the expansion of USDC supply, market share and a diversification beyond reserve-based income. With CRCL now trading at elevated multiples increasingly detached from fundamentals, turning regulatory clarity, institutional relationships, and distribution strength into durable, diversified growth will be key.
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