Circle IPO Prospectus Depth Interpretation: Financial Status, Business Model and Strategic Planning

Recently, Circle Internet Financial submitted its S-1 registration statement to the U.S. Securities and Exchange Commission, planning to list on the New York Stock Exchange under the ticker "CRCL". As the issuer of the USDC stablecoin, Circle's upcoming IPO is attracting significant attention. This article will deeply analyze Circle's financial condition, business model, and strategic intentions, exploring its potential impact on the cryptocurrency industry.

1. Financial Condition Analysis

1. The contradiction between income growth and profit decline

In 2024, Circle's total revenue reached $1.676 billion, a year-on-year increase of 16%. However, net income fell from $268 million to $156 million, a decline of 42%. Revenue growth mainly came from reserve income, accounting for 99% of total revenue. The circulation of USDC significantly increased, reaching $32 billion by March 2025, a year-on-year growth of 36%.

On the cost side, distribution and transaction costs increased by 40%, reaching $1.011 billion. Operating expenses also rose, from $453 million to $492 million. This situation of revenue growth coexisting with profit decline reflects the cost pressures faced by Circle during its expansion.

2. Analysis of Reserve Income Model

Reserve income is Circle's core source of revenue, reaching up to $1.661 billion in 2024. This portion of income comes from the interest earned on managing USDC reserve assets. USDC reserve assets are primarily invested in U.S. Treasury bonds (85%) and cash (10-20%).

It is worth noting that Circle has to share this income with a certain trading platform. This revenue-sharing agreement is the main reason for the low net income. In the future, changes in the Federal Reserve's interest rate policy and fluctuations in USDC demand may affect the stability of reserve income.

3. Asset and Liquidity Overview

The asset structure of Circle focuses on liquidity and transparency. 85% of USDC reserves are invested in government bonds, with 10-20% in cash held in top banks. The company publishes reserve reports monthly, enhancing user trust. However, the company's own cash and short-term investment interest income is negative, with a projected loss of -34.712 million USD in 2024, potentially affected by management fees.

2. Business Model Deconstruction

1. The Core Position of USDC

USDC is the core of Circle's business and ranks second in the global stablecoin market. It is widely used in payments, cross-border transfers, and decentralized finance (DeFi). The advantages of USDC lie in compliance and transparency, adhering to the EU's MiCA regulations and obtaining a French EMI license.

2. Diversification

In addition to USDC, Circle is also developing a digital wallet, cross-chain bridge, and its own Layer 2 public chain to enhance the use cases and scalability of USDC. These businesses currently have limited revenue contributions but represent future growth potential.

3. Relationship with a certain trading platform

The relationship between Circle and a certain trading platform is quite complex. The two once jointly managed USDC, but later Circle took full control, although the revenue sharing agreement is still in effect. This cooperation model is both a historical legacy and an important factor affecting current profits.

3. Listing Strategic Intent

1. Fundraising and Business Expansion

Circle plans to raise funds through an IPO to pay taxes, operational capital, product development, and potential acquisitions. The company hopes to accelerate expansion and enhance USDC's market share in the stablecoin market through the injection of funds.

2. Responding to Regulations and Enhancing Reputation

Choosing to go public in the United States, Circle actively accepted the SEC's disclosure requirements, enhancing the company's transparency and credibility. This strategy helps to win the trust and cooperation of more traditional financial institutions.

3. Shareholder Interests and Liquidity

The equity structure design of Circle retains the control of the founders while providing liquidity for early investors and employees. The IPO is both a means of financing and a measure to balance the interests of all parties.

4. Insights for the Cryptocurrency Industry

1. Industry Benchmark Role

Circle's IPO has opened up traditional exit paths for crypto companies, which may enhance venture capital confidence in the crypto industry and attract more funding.

2. Possibilities of Innovative Models

The successful listing of Circle may inspire other cryptocurrency companies to follow suit, exploring innovative models such as stock tokenization and blockchain trading, blurring the lines between traditional and crypto finance.

3. Risks and Challenges

The sluggish technology stock market and regulatory uncertainty are the main challenges facing Circle. Its listing performance will test the adaptability of crypto companies in traditional markets.

Conclusion

Circle's IPO showcases its financial strength, business ambitions, and industry aspirations. Reserve revenue is the lifeblood of the company, but revenue sharing and interest rate dependence also pose potential risks. If the IPO is successful, Circle could not only solidify its market position but also pave new avenues for the entire cryptocurrency industry. At the intersection of crypto and traditional finance, Circle's future development is worth ongoing attention.