Circle IPO Sparks Controversy in the Encryption Industry

A USDC stablecoin issuing company recently completed its initial public offering ( IPO ), priced at $31, higher than the expected range. The first day's closing was $84, and a week later it exceeded $107. Investment banks' pricing errors on the IPO reflect the traditional finance industry's enthusiasm for encryption assets, especially stablecoins.

Reasons to be optimistic about the company's stock:

• The first public investment target focused on the growth of stablecoins in the market
• The stablecoin market is expected to grow to a trillion-dollar scale.
• USDC manages assets of 60 billion USD, with an annual increase of 91%.

Reasons for being bearish on the company's stock:

• The business model relies entirely on interest rates
• Rely on a certain trading platform as the issuance agent to share half of the interest income.
• Rely on asset management companies and collaborate with competitors.
• Revenue and profit growth has been slow in the past three and a half years.
• The current stock price valuation of 107 dollars is relatively high: Approximately 30 times gross profit Approximately 110 times return Adjusted EBITDA is approximately 59 times ( annualized for Q1 2025 ).

Criticism of IPO Allocation

The chief investment officer of a certain encryption investment firm publicly criticized the company's IPO allocation tendency towards traditional financial institutions, neglecting encryption-native participants. He stated:

"We have communicated with several encryption funds and companies, including early users and promoters of USDC, and even some institutions closely related to underwriters. They either received a very small allocation or none at all. This further confirms the fact that the company leans towards traditional Wall Street and ignores encryption supporters."

"I still cannot find any native encryption institution that has received reasonable treatment in this IPO allocation. This situation is simply absurd and shows the company's extremely shortsighted behavior."

Response to Criticism

Some people believe this criticism is about "wanting to take advantage of benefits for free." The investment officer responded that they are willing to buy the stocks at the same price rather than asking for them to be given for free. IPO allocations are a manual process, and the company can control the distribution.

Some believe that the underwriters should be blamed rather than the issuing company. He explained that the issuing company is the one that ultimately decides the allocation of customers, has the right to view all orders, and controls the distribution.

Regarding the statement "the IPO was oversubscribed by 25 times," he pointed out that this might just be a "cosmetic" adjustment in the final data and does not reflect actual fairness. Early genuine buyers of the orders have instead been marginalized.

Summary

It is still unclear whether the company's IPO allocation will affect its future development. Industry insiders are looking forward to the upcoming institutional shareholder report to see which investors share in the growth dividends.

This controversy reflects the conflict between the traditional IPO system and the "alignment of interests" concept in the encryption industry, which is worth deep reflection by the industry.