By Shen Jianguang & Bo Jiale | Updated: June 30, 2025
Circle’s business model demonstrates profitable potential, and stablecoins play an indispensable role in daily financial activities.
Reasons Behind the Stock Surge
The first stablecoin company, Circle, went public on NASDAQ on June 5 with an initial offering price of $31 per share. In less than a month, its stock soared to $180 (peaking at $290), boasting a P/E ratio of 260x. Just five weeks before its IPO, Ripple proposed acquiring Circle for $50 billion—today, Circle’s market cap approaches 8x that valuation.
Two key drivers explain this meteoric rise:
- Regulatory Clarity and Market Consensus
The GENIUS Act, passed with bipartisan support in the U.S. Senate, validated stablecoins' future utility, dispelling market uncertainties. Only critics like Senator Warren remain skeptical, likely due to political motives or limited blockchain understanding. - Proven Profitability
Though Circle’s 2023 profits ($156M) were just 1% of Tether’s ($13.1B), its focus on regulated institutional clients—partnering with BlackRock for reserves and paying Coinbase for liquidity—positions it for scalable margins. Unlike Tether’s offshore model, Circle’s transparency appeals to U.S. crypto traders.
Business Verticals Stablecoins Can Disrupt
- Payments
Traditional card networks charge 2–5% per transaction. Stablecoins could undercut fees by 70–85%, especially for crypto-native processors. - Commercial Banking
Basic services like savings and transfers could migrate to stablecoin-based "debit accounts," leveraging blockchain efficiency. - Brokerage
Already pivotal in crypto trades, stablecoins may expand into tokenized stocks/bonds, mirroring platforms like Bitfinex’s margin lending. - Remittances
With global fees averaging 6.2%, stablecoin solutions (e.g., Binance P2P) offer rates as low as 0.01%, challenging incumbents like Wise. - Trade Finance
Banks’ sluggish innovation creates openings for stablecoins to streamline cross-border transactions via transparency and lower costs.
Limitations of Stablecoins
- Consumer Lending: Credit risk assessment requires human judgment; stablecoins lack mechanisms for unsecured loans.
- Mature Digital Economies: Systems like China’s Alipay or India’s UPI are too entrenched for domestic disruption.
- Illicit Activities: Blockchain’s transparency makes stablecoins poor tools for crime vs. cash or traditional wires.
👉 Explore how stablecoins are reshaping finance
FAQs
Q: Can Circle overtake Tether’s market share?
A: Unlikely soon, but as the only U.S.-listed stablecoin firm, Circle appeals to institutional investors seeking regulated exposure.
Q: What’s Circle’s long-term addressable market?
A: Potentially trillions—combining payments (Visa/Mastercard’s $1.3T) and banking (U.S. banks’ $1.52T).
Q: Are stablecoins truly replacing banks?
A: Partially. They excel in efficiency-driven services but can’t replicate credit underwriting or complex lending.
👉 Learn why institutional adoption favors USDC
Shen Jianguang is JD.com’s Chief Economist; Bo Jiale is a Research Director at JD’s Economic Development Institute.