Circle's share price triples in first hour of trading

Bloomberg

The stablecoin industry may finally have a shepherd in Circle's initial public offering. 

Shares of Circle surged to as high as $95.98 in their first hour of trading on the New York Stock Exchange, suggesting robust investor appetite for the burgeoning cryptocurrency and stablecoin industries.  

All eyes have been on Circle since the company first filed its S-1 with the Securities and Exchange Commission in April. The technology company has since upsized that offering twice. 

On Thursday, Circle said it would offer 34 million class A common shares at $31 a piece. That's an increase from the 32 million shares at $27 to $28 per share it planned to sell Monday, and from the 24 million shares at $24 to $26 per share in its initial pricing last week.  

Circle's IPO has been widely regarded as a bellwether for the digital asset industry following aggressive campaign contributions during the 2024 presidential election as cryptocurrency companies looked to carve out favorable legislation after restrictive Biden-era policies limited banks' participation in crypto. 

"The ability to participate in the public markets at scale is something we haven't seen before in this space," Duane Block, Accenture's digital assets lead, told American Banker. "These filings are a testament to the products, services, capabilities and operational maturity leading firms in the digital asset industry have been developing over the past few years." 

But Circle's IPO is just the first proof point in what many say is a long road ahead in the digital asset industry's quest for mainstream adoption. The fintech will likely have to find ways to compete against banks and financial institutions who are also considering issuing their own stablecoins. 

Bank of America CEO Brian Moynihan said earlier this year at the Economic Club of Washington, D.C., that the bank would consider issuing its own stablecoin once regulators passed federal legislation, and Santander is also reportedly considering a stablecoin launch.  

"[Circle] has clearly done things right. … There's very clear validation around certain use cases," Robert Anderson, a partner at FTV Capital, told American Banker, pointing to lowered costs and faster reconciliation times, especially in high-value, cross-border transactions. 

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But there are nuances in the stablecoin industry that still need to take shape before winners and losers can be crowned. 

"It will be really interesting to see what the global banks do — and others, quite frankly — because right now they have so much of that money movement business," Anderson said. 

Circle will also need to find ways to diversify its revenue streams, which predominantly comes from float. Circle generated 96% of its total revenue for the three months ended March 31 from income earned from the management of Circle stablecoin-related reserves, according to the company's S-1 filing. 

"It's nice when rates — especially money market funds — are at 4% plus. It's nice when banks like JPMorganChase and others don't have their own stablecoins yet," Anderson said.