Unchained

USDC's Circle Just Filed to IPO. Would It Make a Good Investment? - Ep. 812

35 snips
Apr 4, 2025
Guest
Omar Kanji
Omar Kanji, a Partner at Dragonfly, delves into Circle's recent IPO filing for USDC and what it means for the stablecoin landscape. He discusses the staggering regulatory compliance costs Circle faces, contrasting it with Tether's strategy. The valuation of Circle at $5 billion raises eyebrows, and Kanji explores how forthcoming regulations could reshape competition. Moreover, he highlights the potential challenges posed by Trump's tariffs on Circle's growth, providing a nuanced look at the evolving crypto landscape.
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INSIGHT

Distribution Costs

  • Circle pays high distribution fees to platforms like Coinbase and Binance to get USDC into users' hands.
  • These fees are a necessary cost for competing in the current stablecoin market.
INSIGHT

Interest Rate Dependence

  • Circle's revenue is highly dependent on interest rates; a small decrease could significantly impact their income.
  • They argue that lower rates might increase USDC circulation, offsetting the revenue loss.
INSIGHT

Compliance Costs

  • Circle's high compensation and administrative costs are partially due to regulatory compliance efforts.
  • They are investing heavily in navigating the complex regulatory landscape across multiple jurisdictions.
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