Circle, one of the leading companies in the crypto industry, will not go public through an Initial Public Offer (IPO) in 2024, according to Polymarket.
Circle Internet IPO forecast
A betting market on this topic has attracted $5,074 from investors and places the odds of such an IPO at 35%. This means that most participants believe that the initial public offering will not happen this year.
Circle Internet Financial has done a lot of work in preparation for going public. It recently changed its domicile from the Republic of Ireland to the United States. It also filed its S1 documents with the Securities and Exchange Commission (SEC) a few months ago.
There are a few concerns about Circle. First, USD Coin, its flagship stablecoin is not growing as its market cap has remained at $33 billion in the past few months. EURC, its other stablecoin is valued at just $37 million.
Second, there are regulatory concerns since the SEC has hinted that it views stablecoins like Tether and USDC are securities. A move to regulate Circle like a bank would be highly expensive and the company has said that stablecoins were not investment contracts.
Third, competition in the stablecoin industry has grown in the past few months. Tether stil dominates with a market cap of over $114 billion. PayPal’s PYUSD has accumulated over $700 million in assets while Ethena USDe has over $3 billion.
Federal Reserve rate cuts
Finally, there are concerns that Circle’s revenue will start falling when the Federal Reserve changes its tune on interest rates. Stablecoin issuers like Circle make money in two main ways: transaction fees and investments.
It shares a small fee with the respective blockchain when people make transactions. It also invests some of its dollar holdings in government bonds that are yielding over 4%. As a result, the company has made a fortune in this era of high rates.
In 2023, it made over $779 million in revenue in the first half of the year. While its earnings are not public, Circle has likely made more money this year since interest rates have remained at an elevated level.
It is unclear the valuation that Circle Internet will get when it goes public. It was valued at over $10 billion when it attempted to go public via a SPAC merger in 2021.
