Circle Files to Go Public. What Now?

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Introduction

Welcome to the Tokenized newsletter, brought to you by the creators of the Tokenized Podcast; Simon Taylor of Fintech Brainfood and Pet Berisha of Sporting Crypto, written by Jeremy Batchelder.

We are the newsletter for institutions that need help preparing for a Tokenized future.

We run through the headlines every week, what it means for you and a market readout. Always with an institutional, business-focused perspective. 

Things to Know 👀 

🏛️New Guidance from the SEC on Stablecoins

The SEC issued new guidance this week clarifying that many stablecoins will not be classified as securities

Stablecoins that would not be considered securities have the following characteristics

•  A cryptocurrency designed to maintain a stable value relative to USD through full asset backing

• These stablecoins are backed by USD and/or other low-risk, liquid assets held in a reserve

• The reserve must maintain a USD value that meets or exceeds the redemption value of all circulating stablecoins

• Covered stablecoins operate on a one-for-one basis with USD, where the issuer always allows minting and redeeming at a 1:1 ratio

The Tokenized Take:

• All of the regulators are giving clarity: This regulatory guidance from the OCC, FDIC, and now SEC creates a clearer path forward that many traditional institutions have been waiting for before entering the stablecoin market. 

• And legislation will follow: This development aligns with the GENIUS and Stable Bills currently moving through the US Government. However, most institutions will likely remain cautious until comprehensive regulation is established.

• But yield-bearing is out of scope: The SEC explicitly excludes yield-bearing stablecoins from this guidance. As noted previously, these instruments have been either disallowed or excluded from both the GENIUS and Stable Acts, creating ongoing uncertainty about their future development.

💸USDC is Now the Default Currency for Binance Pay

USDC is now the default stablecoin for Binance Pay, Binance’s payment product for accepting and paying with stablecoins.

Key Points:

• Binance Pay includes both Binance's peer-to-peer payment offering and merchant API suite for stablecoin payment and acceptance

• Binance Pay has over 40 million active users

• Binance has now made USDC the default stablecoin for all use cases, replacing Tether issued stablecoin USDT

The Tokenized Take:

• Distribution is crucial for stablecoin issuers: USDC integration into one of the most widely used stablecoin platforms represents a significant opportunity for Circle.

• Circle’s is Investing Heavily in Partnerships: As noted in Circle's S-1, Circle and Binance formed a strategic partnership earlier this year, involving a $60 million one-time payment to Binance and requiring Binance to maintain $1.5 billion of USDC in their treasury.

• Expect more “exclusivity deals”: We anticipate more partnerships between existing stablecoin issuers and platforms with established distribution channels. It remains to be determined whether the issuers will end up on the winning side of these deals.

• USDC Supply is up 3x on Binance: According to Artemis.xyz, USDC holdings on Binance have reached approximately $5 billion, representing more than a threefold increase since early 2024.

👀 Tether Eyes Setting Up a US Entity

Tether, the world's largest stablecoin issuer, plans to create a new stablecoin for the U.S. market if Congress passes pending crypto legislation.

Key Points:

• Tether CEO Paolo Ardoino says the company "will move fast" to establish a U.S. domestic entity (potentially named Tether USA) once legislation passes

• The stablecoin legislation moving through Congress could potentially ban Tether from the U.S. market as the company is not currently registered in the U.S.

• Tether currently has $144 billion in market circulation, over $80 billion more than Circle's USDC (the second-largest stablecoin)

The Tokenized Take:

• Tether is not allowed in Europe: European exchanges were forced to delist USDT after MiCA was enacted because USDT did not comply with MiCA legislation. This outcome or fines would be the most likely scenario for Tether in the US if they failed to comply with US stablecoin legislation.

• Tether is positioning itself for US legislation: Clear legislation in the US seems imminent with bills currently in the House and Senate and President Trump publicly stating that he would like legislation to be signed by August.

• Tether is starting a PR push in the US: The CEO of Tether, Paolo Ardoino, was recently on Bloomberg's Odd Lots podcast. While Tether is the clear market leader in the issuance space, they have an illustrious history that they will need to overcome…

Stablecorner ⚖️ → Circle’s IPO Filings

Circle filed their S-1 last week, indicating their intentions to go public in 2025.

There has been a lot of great commentary (For example Simon Taylor here, Chuk from the Weekly Stable here) about the economics of Circle and what the changing stablecoin market dynamics could mean for the company. Here are some of the things that stuck out to me:

First, everyone has quickly pointed out the costs Circle is paying for distribution. 

• Circle currently has an agreement with Coinbase to split all revenue from yield on USDC held outside of Circle or Coinbase 50-50. 

• Coinbase also receives all the yield generated from USDC held within the Coinbase platform. 

• However, these are remnants of the CENTRE Consortium, which was a joint venture between Circle and Coinbase to launch USDC. This agreement will most likely not be replicated with any other partner and is set to expire in 2026. There are other agreements that Circle has paid significantly for to increase distribution of USDC, such as their arrangement with Binance. Details of their other partnerships, such as with NuBank and Mercado Libre, have not been disclosed.

The company is expanding beyond stablecoin issuance with their Cross-Chain Transfer Protocol (CCTP) 

• CCTP has facilitated about $24.7 billion in transfers across blockchains like Ethereum, Avalanche, Base, and Polygon. 

• CCTP V2, introduced in March 2025, now monetizes each transaction, creating a new revenue stream separate from interest income.

People are discounting how massive Circle’s current distribution advantage is. 

• While incoming stablecoin regulation will create more competitors in the space, Circle has a huge head start in terms of distribution and integration into existing crypto products and exchanges.

• Existing fintechs such as PayPal have tried to compete with the likes of Circle; however, they have about ~1.5% of Circle's issuance and even less than that in terms of trading volume.

Circle is looking to build the next global payments network by obtaining regulatory licenses and registrations in multiple jurisdictions and integrations with these regions' local payment rails. However, this is coming at a cost as their G&A and compensation costs have drastically increased over the last two years.

Some important questions about the opportunity of Circle ahead:

• Should Circle be valued at a bank multiple where its primary source of revenue is NIM, or will they be valued as a payments or technology business such as Visa where they can earn money on every transaction and auxiliary services?

• There is consensus that stablecoin supply will increase and interest rates will be reduced. Will this supply growth outpace declines in revenue from a lower interest rate environment?

• Circle has invested heavily in lobbying for future stablecoin bills that will benefit compliant and US-based stablecoin issuers. How will Tether fare with this change in the stablecoin market?

However, this all may be for naught as the Wall Street Journal recently reported that Circle was thinking about delaying their IPO due to economic uncertainty from Trump’s policies.

📰 Some More News:

🏦 Tokenization, Stablecoins & Finance

• Brazil’s largest bank Itaú weighs stablecoin launch (Read more here)

• Justin Sun’s allegations of FDUSD insolvency cause 9% depeg (Read more here)

• Tokenized equities will dwarf stablecoins, says Kraken co-CEO Arjun Sethi (Read more here)

• Nonco is looking to disrupt the $7 billion FX market (Read more here)

• Sony Singapore Now Lets Shoppers Pay in USDC Through Crypto[dot]com (Read more here)

• PayPal Pushes Further Into Crypto by Adding Chainlink and Solana as New Offerings (Read more here)

🤑 Funding

• Remittance application Felix Pago raises $75 million led by QED Ventures (Read more here)

• Stablecoin-focused blockchain raises $16 million led by Dragonfly Capital (Read more here)

• Crypto-to-Fiat App P2P[dot]me Raises $2M from Multicoin and Coinbase Ventures (Read more here)

• UK digital asset exchange Archax expands to US with acquisition (Read more here)

• Investment Firm Republic to Acquire Crypto Trader INX Digital for Up to $60M (Read more here)

💼 Government & Policy

• BlackRock wins nod to become crypto asset firm in the UK (Read more here)

• Illinois to Drop Staking Lawsuit Against Coinbase (Read more here)

• Kraken Secures Restricted Dealer Status in Canada Amid 'Turning Point' for Crypto in the Country (Read more here)

• Sling Money is now MiCA licensed in Europe (Read more here)

Simon’s Market Readout 💬 

Tweet of the Week 🐤 

From Electric Capital’s Maria Shen

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