USDC

Circle Internet Financial announced on January 11, 2024, they silently filed a Form S-1 draft registration statement with the SEC for a proposed initial public offering of its equity securities. This is significant in the world of crypto and payments for a number of reasons:

The company’s flagship product, the United States Digital Coin (USDC) is the second most used stable coin globally. USDC is 100% backed (1:1) by cash and short-term government securities. The company’s more recently launched Euro Digital Coin (EURDC) works on the same principle. Circle generates transaction revenues from redeeming USDC and interest income from customer deposited currency reserves backing each USDC stable coin.

USDC is regulated and transparent, the face value of a USDC token is always known, as is its ability to convert into US dollars through the company or a crypto exchange, including into any fiat currency, 24/7/365.

In our opinion, Circle answers the call for an industrial strength, global, and legitimate next generation payments platform for businesses and consumers.

On a monthly volume basis the company processed $250 billion worth of USDC transactions in April, off from the $300 billion all-time high in the prior month, but tracking 1.5-3x better than any other two-month period in the last four years.

At the end of April, USDC market capitalization was $33 billion, which indicates issued (but unused) tokens, otherwise known as value of coins in circulation. The comparatively higher April transaction value number suggests strong intra-month issuance and usage trends (i.e. USDC was issued to a business or consumer and redeemed in a transaction within the same month which doesn’t impact end of month market cap).

There are many benefits to using USDC, including: fast (almost immediate) and low-cost transaction processing anywhere in the world. Cross border remittance is a natural market which is traditionally expensive on a dollar value sent basis (consumers), and slow for international B2B transactions (may require several days). The combined service revenue opportunity is over $100 billion.

USDC

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