Coin Metrics noted that Circle Internet Group (NASDAQ:CRCL), the issuer of USD Coin (USDC), has seen its market capitalization surge to $63 billion following its NYSE debut on June 5, 2025, outpacing the $61 billion in USDC circulating supply.
The explosive 700% rally in Circle’s stock from its $31 IPO price to ~$263 has been driven by the passage of the GENIUS Act and growing demand for regulated digital dollars.
However, trading at ~37x trailing revenue and ~401x net income, Circle’s valuation appears increasingly detached from its fundamentals, raising questions about sustainability amid competitive pressures and reliance on interest income.
The GENIUS Act, passed by the U.S. Senate, has bolstered Circle’s position as a leader in the stablecoin market, where USDC holds a 25% share with $61 billion in circulation.
The legislation has fueled optimism for compliant digital currencies, positioning Circle as a prime beneficiary.
The IPO, oversubscribed by over 25x, reflects investor enthusiasm for pure-play stablecoin exposure, sparking interest in other crypto IPOs like Bullish and Gemini.
Yet, Circle’s lofty valuation—surpassing Fintech peers like NuBank (27x P/S) and Coinbase (~57x P/S)—suggests narrative-driven exuberance may be outpacing financial realities.
The Coin Metrics report added that Circle’s revenue primarily stems from interest on USDC reserves, held in cash and the BlackRock Circle Reserve Fund, which invests in short-term U.S. Treasuries.
In 2024, Circle generated $1.6 billion in gross revenue from $44 billion in reserves, yielding an effective rate of ~3.6%.
However, distribution costs, particularly to Coinbase, significantly erode Circle’s take.
Under their revenue-sharing agreement, Coinbase earns 100% of interest on USDC held in its products and 50% on USDC held elsewhere, capturing ~56% of Circle’s 2024 reserve revenue ($900 million).
The Coin Metrics report also noted that this resulted in Circle having $768 million in net USDC revenue, highlighting the partnership’s dual role as both a growth driver and a financial burden.
Coinbase’s role in scaling USDC is significant.
Its platforms, including the Base Layer-2 network and Coinbase Payments, now hold 22% of USDC supply ($12 billion in Q1 2025, up from 5% in 2022).
This growth aligns both companies’ incentives but underscores Circle’s reliance on Coinbase’s ecosystem.
With Coinbase retaining significant upside—USDC income accounts for ~23% of its revenue—investors must weigh how this dynamic affects Circle’s valuation, now 82% of Coinbase’s market cap.
Looking ahead, Circle’s revenue trajectory depends on USDC supply growth, interest rates, and competition from new regulated issuers enabled by the GENIUS Act.
Projections based on on-chain data and public filings suggest USDC reserve income could climb from $1.6 billion in 2024 to $9.15 billion by 2029, with Coinbase potentially claiming $5.99 billion and Circle retaining $3.16 billion.
However, with interest rates expected to decline, Circle’s ability to maintain or grow its 25% market share will be critical.
Rising competition from banks and fintechs, combined with falling yields, could compress margins if Circle remains heavily reliant on reserve income.
To mitigate these risks, Circle must diversify its revenue streams beyond interest-based income.
Emerging initiatives, such as the Circle Payments Network, show promise but are not yet significant contributors.
Scaling USDC adoption, particularly through institutional partnerships and regulatory clarity, will be key to sustaining growth.
The stablecoin market is projected to expand significantly, but Circle faces challenges from new entrants with similar regulated models.
According to the Coin Metrics report, Circle’s IPO marks a pivotal moment for stablecoins, offering investors a direct stake in the digital dollar’s rise. While regulatory tailwinds and first-mover advantages position Circle favorably, its premium valuation demands scrutiny.
Coin Metrics noted that with the fundamentals trailing market enthusiasm, Circle’s long-term success hinges on expanding USDC supply, capturing market share, and building diversified revenue streams to navigate a competitive and evolving landscape