Circle faces challenges as it prepares for IPO amid shrinking profits

Circle, the issuer of the USDC (CRYPTO:USDC) stablecoin, has filed an S-1 registration statement with the SEC to pursue an initial public offering (IPO).

The move marks a significant step for Circle, which previously abandoned a SPAC merger attempt in 2021 due to regulatory hurdles and market downturns.

The filing offers insight into Circle’s financials, revealing a net income of $155.7 million in 2024, a 42% drop from $267.6 million in 2023.

The decline contrasts sharply with rival Tether’s record $13 billion profits last year, largely driven by U.S. Treasury yields.

Kevin Lehtiniitty, CEO of Borderless.xyz and a veteran in stablecoin development, criticized Circle’s costly approach to regulatory compliance.

“Circle spends a ton of money on licensing, staffing, and lobbying—costs that Tether avoids with its permissionless approach,” Lehtiniitty said.

Circle’s partnership with Coinbase also adds significant costs.

According to its filing, Circle paid $908 million to Coinbase in 2024 to facilitate USDC distribution on the exchange.

Lehtiniitty described this as “the cost of distribution to be number two,” highlighting the competitive challenges in the commoditized stablecoin market.

Lehtiniitty argued that Circle’s strategy relies heavily on creating regulatory policies that favor its operations while pushing competitors out.

“Creating self-serving regulatory policies is solvable but incredibly capital-intensive,” he noted.

Circle’s IPO filing comes amid legislative progress for stablecoins in the U.S.

President Trump has expressed support for signing stablecoin-related bills into law by summer.

The GENIUS Act recently passed the House and is being reviewed alongside a Senate bill.

Lehtiniitty praised these bills for their balanced approach to regulation.

He emphasized the importance of state-level oversight for smaller stablecoins and national regulation for larger ones through the Office of the Comptroller of the Currency (OCC).

“This framework allows startup experimentation while providing clarity for larger players,” he said.

As Circle prepares for its IPO, questions remain about its ability to sustain profitability and compete effectively in a saturated market.

The outcome of its public listing will likely shape its role in the evolving stablecoin ecosystem.