CRCL: The $25 Billion T-bill Business
Circle is not a payments company. Stripe will eat it alive
A blockbuster IPO. A 160%+ day-one gain. Circle (CRCL - NYSE) has settled below its euphoric peak, but it’s still trading at a $25 billion market cap for what is, essentially, a glorified money market fund.
If you’ve been in crypto long enough, it’s tempting to treat this as a win. A high-profile IPO that made insiders rich. Wall Street validation. Mainstream acceptance. But step back. All that’s really happened is that public markets have embraced the most TradFi corner of crypto: stablecoins. Or more precisely, tokenized T-bills.
Certainly Circle’s main product, the USDC dollar-pegged stablecoin that is tradeable on crypto rails, has decent penetration in an exploding market:
But to me, the IPO is a turning point for the industry. Just not in the way CRCL investors might hope.
The Beginning of a New Era?
Normally I don’t opine on stocks, but this IPO reveals broader forces worth watching.
Mainstream investors want crypto exposure with familiar risk profiles. That’s driving valuations up for things that look safe, even when they aren’t scalable. CRCL is rallying like some of the most aggressive Bitcoin Treasury Companies (I’m looking at you, Metaplanet). I’m not sure it ends well.
Like Bitcoin, stablecoins are being absorbed by TradFi and by Big Tech. Platforms and businesses that crypto once aimed to displace. And Circle is a weak competitor to any of them.
So no, this isn’t financial advice. But a company trading at 220x trailing earnings (or 1400x if you annualize Q1) with no moat, no pricing power, and a single boring revenue source (T-bill interest) is not obviously worth $25 billion.
Circle: The Business Is the Balance Sheet
Circle’s core product is simple: you give them a dollar, they give you USDC, and they buy a short-term Treasury bill. Then they collect the interest. That’s it. It’s not really crypto. Its biggest use case is as a trading pair on decidedly non-crypto centralized crypto trading venues.
It’s a stable, boring, compliant, non-scalable business. In 2024, with T-bills yielding over 5%, Circle looked like a cash machine. But the average yield on 1-month bills over the past 25 years is just above 1%.
If rates mean-revert, the revenue evaporates.
Still, CRCL is being valued like a high-growth tech company: 330x trailing earnings. A high-margin infrastructure play, they said. “The next Tether,” some whispered.
Tether, the dominant issuer of stables (USDT), is highly profitable. So why not Circle? If Circle could make $13 billion someday, perhaps its stock is undervalued.
However, Circle is not Tether. It’s transparent, boring, and mostly based on whatever it can earn on its T-bills. That earns it goodwill from regulators and polite nods from TradFi. But it’s not particularly profitable. Even when earning 5% on T-bills.
They Pay Coinbase to Use USDC
Let that sink in. Circle pays Coinbase, their biggest “customer” and investor, to distribute USDC. That’s not product-market fit. That’s paid placement.
When your business relies on immense incentives to your largest distribution partner, it’s not a platform. It’s a supplier. And one without pricing power.
The numbers are frightening. 99% of Circle’s revenue comes from the carry on Bills. Money the USDC holders should be getting in a perfect world. Last year that was $1.6 billion. Out of that they paid away a billion dollars to Coinbase. They are on track for even more this year. With lower rates reducing their carry.
While CRCL issues USDC, pays for the privilege, and runs a glorified money market fund, the traditional payments industry is evolving. The winners will be those who own the customer, the rails, and the wallet. Circle owns none of these.
Mastercard and VISA will. So will the banking system. Stripe does already.
Why do the incumbents want in? Well realistically there are three use cases for dollar-pegged stablecoins that actually make sense.
A reasonably convenient way to peg/trade/ store USD in the Global South, where local currencies generally depreciate
In trading pairs on non-regulated crypto exchanges in trading (eg USDC/BTC)
Cross border micro USD payments
1 and 3 are where the current platforms feel they have a big edge.
Stripe Doesn’t Want to Compete. It Wants to Replace.
While Circle pays for distribution, Stripe is distribution. It already offers:
Stablecoin balances in USDC
Fiat rails (ACH, SEPA, SWIFT)
Global onboarding in 100+ countries
Payments, invoicing, KYC, treasury management
And soon… its own stablecoin (USDB)
All of this is integrated. Frictionless. API-first. And Stripe doesn’t have to pay anyone to use its rails. Everyone already does.
Briefly, Stripe has the highest market share of any payments processor. And is available in 50 countries, including Nigeria. It’s profitable, and trusted.
It is gunning for Circle’s business, as a small part of a wider strategy. Stripe doesn’t just want to offer stablecoins. It wants to wrap them inside its dominant global payments network, and make the coin invisible to the user. Just another method in the checkout flow. No need for complicated seed phrases and risky (for the uninitiated) transactions.
And unlike Circle, Stripe doesn’t need yield to survive. It makes money on throughput. Volume. SaaS. The stablecoin is just plumbing. Yield is the bonus.
Circle’s Business Model Is a Dead End - The Platforms Are Coming
Tether made money because it took credit risk and embraced opacity. And it’s the favorite of those who want to avoid the regulated financial system. Circle, by contrast, is boring, compliant, and 99% reliant on interest income from Treasuries. It’s not a payments company. It’s a yield vehicle.
But the yield isn’t special. You could get it yourself. And if rates fall, or regulation allows broader access to dollar rails (it’s happening), there will be no reason to hold USDC. Or issue it.
Having a crypto-friendly White House encourages and supports the traditional financial system. Pre-Trump, banks and other financial companies were reluctant to get involved in stables. That left the business to Tether and Circle. Nobody wanted to be the next Signature Bank. Or get a Wells Notice from the SEC.
Now it’s a free-for-all. The finance monopolies are going all-in. This matters, because they have the advantage.
This is because stablecoins won’t be standalone products in the very near future. They’ll be features of broader platforms. Think Mastercard, PayPal, Visa, Stripe. All of them are integrating stablecoin support. Not because they believe in the mission. But because they want a stranglehold on their customers. And stables are just one of many ways to keep customers on their platform.
The future isn’t about which stablecoin you use. It’s about who owns the checkout page. And Circle doesn’t.
Circle is a stablecoin issuer. Stripe is a payments empire. One of these companies distributes financial infrastructure to the world. The other depends on that infrastructure just to function.
A Quick Valuation Gut Check
Let’s be charitable. Say rates average 2% over the next five years. Say Circle pays 25% of revenue to Coinbase. Say it deserves a 30x earnings multiple on future EPS.
To justify a $25B valuation, USDC would have to explode in size while fending off Stripe, banks, and global regulation. That’s not a base case. That’s a miracle.
Using round numbers, it would have to issue 4-5x what is outstanding now. While facing Tether’s USDT, Trump’s USD1, Paypal’s PYUSD, Stripe’s USDB, JPMorgan’s JPMCoin, etc, etc, etc.
Exit Strategy Disguised as IPO
The IPO proceeds weren’t just for growth. A meaningful chunk went to insiders and early investors, including Coinbase. In fact 19 million shares (over half) raised almost $600 million that did not go to the company. Sure, the rest will help fund operations. But insider selling like this is not a good look.
For those who have not yet exited, the 180-day lockup will end eventually. And when it does, the people who know the most about the business may be first out the door.
Final Word
Circle isn’t a fraud. It’s not even a bad company. It’s just not the future.
The stablecoin story isn’t over. But Circle’s chapter might be.