Original author: TechFlow
This Thursday, the most important IPO in the crypto market after CoinBase arrived.
Cirlce, the issuer of the US dollar stablecoin USDC, will be listed on the New York Stock Exchange, with an expected maximum fundraising of US$896 million and the stock code CRCL.
However, on the eve of its listing, the share price of a Hong Kong-listed company, China Everbright Holdings, continued to rise, increasing by 44% in 5 days, revealing a secret story about Circle China.
As early as 2016, Everbright Holdings jointly invested in Circle with IDG Capital and became its shareholder.
Even in 2018, domestic media reported that Cicle might be injected into a domestic A-share listed company, which prompted the Shenzhen Stock Exchange to send a letter of inquiry. Finally, the listed company had to come forward to refute the rumor.
Circles frequent contacts with Chinese companies are also a witness and epitome of its historical development. From crypto wallets to exchanges to stablecoins, Circles youthful years were full of hardships and twists and turns.
This article takes you through Circle’s history and relationship with China.
The original dream: Alipay in the United States
In 2013, Jeremy Allaire and Adobe Chief Scientist Sean Neville co-founded Circle, headquartered in Boston, which is his third formal startup.
Prior to this, he founded two public companies, software company Allaire and online video platform Brightcove, in 1995 and 2012 respectively, and accumulated deep network resources.
When Circle was first established, it received $9 million in Series A funding, setting a record for the highest amount of funding ever raised by a cryptocurrency company at the time.
Investors include Jim Breyer, Accel Partners and General Catalyst, all of whom were investors in Allaires previous company, Brightcove. Rather than investing in Circle as a company, it would be more accurate to say that they are investing in Jeremy Allaire as a person.
Circle did not initially get involved in stablecoins, but instead aspired to create an American version of Alipay.
Circles original product form was a digital currency wallet that mainly provided storage of cryptocurrency (Bitcoin) and fiat currency exchange services, using Bitcoin to achieve rapid fund transfers.
For example, international transfers using SWIFT require 3-5 working days for confirmation, but using Circle, transfers can be made quickly via the cash-Bitcoin-cash path. In this process, Bitcoin becomes the middle channel.
At this time, Allaire was a firm believer in Bitcoin and believed that it was only a matter of time before a cross-border payment system was realized. He wanted users to be able to transfer money and make payments without too many obstacles, just like using emails and text messages.
Then, Circle sang along the way.
In August 2015, Circle received $50 million in funding led by Goldman Sachs and IDG Capital.
Why did IDG Capital participate in leading the investment in Circle?
This may be inseparable from Jim Breyer, an early investor in Circle, who is famous for his early investment in FaceBook. He also has another identity - IDGs investment partner in the United States.
This investment from IDG also laid the groundwork for Circles future relationship with China.
In September, Circle obtained the first digital currency license, BitLicense, issued by the New York Department of Financial Services, which means that Circle can provide digital currency services in New York State with a license.
In the same year, Chinas mobile payment market was in turmoil. WeChat quickly squeezed out Alipays market share by relying on WeChat red envelopes. Circle on the other side of the ocean did not just wait and see, but also launched social payment at the end of the year.
At that time, this was a bold attempt at innovation. Looking back now, this may have been due to its unclear positioning, which laid the groundwork for multiple transformations that followed.
Chinese Destiny
In 2016, Circle established relationships with many Chinese VCs.
In June, under the scorching sun, Circle successfully joined hands with a number of Chinese capitals and announced the completion of a US$60 million Series D financing round, led by IDG Capital, the lead investor in the Series C round. In addition, Chinese companies such as Baidu, Everbright, CreditEase, Wanxiang, and CICC followed suit.
IDG Capital led Circles C and D rounds and joined its board of directors. IDG Capital founder and partner Xiong Xiaoge once commented on the investment:
At present, most of the domestic investments in Internet companies are in applications, not technology. One important reason is that there are more innovations in business models in China, but relatively few in technology. The American technologies invested by IDG Capital, such as Circles Bitcoin blockchain technology, are basically of the type that the United States can do it, but China cannot do it at present, or it is not as good as the United States. However, although the technology is invested abroad, IDG Capitals original intention is to bring cutting-edge technology to China one day and achieve long-term development. This is our China perspective when investing in an American company.
Not only has Circle introduced a lot of Chinese capital, it also has a dream of entering China.
In early 2016, Circle established an independently operated Circle China company - Shike China, with Tianjin Shike Technology Co., Ltd. as its main body. The companys CEO was Li Tong, who was then the EIR (Entrepreneur in Residence) of IDG Capital, and Xiao Feng of Wanxiang Group served as a director.
Founder Allaire said Circle will conduct business under Chinas regulatory framework and will not rashly launch products without obtaining government permission.
In addition, Circle has been communicating and sharing information with Chinese regulators, banks and other institutions. However, my country attaches great importance to financial security, and a third-party payment license is required to carry out payment business in China. Therefore, Circles business in China has been stagnant for a long time and is in name only.
According to Qichacha information, on August 15, 2020, Tianjin Shike Technology Co., Ltd. applied for simple cancellation and was officially cancelled on September 7, withdrawing from China.
Circles entry into China ultimately turned out to be a pipe dream.
Difficult transformation
In 2016, as the debate over Bitcoin forks and expansion intensified, Allaire gradually became dissatisfied with the stagnant development of Bitcoin. Three years have passed, and the development of Bitcoin has slowed down a lot, Allaire said in an interview before.
On December 7, Circle issued an announcement, announcing that it would abandon its Bitcoin business and retain the transfer business of Bitcoin and legal currencies such as the US dollar, but users would not be able to buy and sell Bitcoin. It also stated that Circle will shift its business focus to social payments.
But in fact, Circles overall development strategy has shifted from payment to transaction. Allaire downplayed the role of Bitcoin (payment) in Circles business and started doing more work on making money, Coindesk once reported.
What is the most profitable business in the cryptocurrency space? Exchanges.
In 2017, Circle announced that although it had cancelled the function of directly buying and selling Bitcoin in the APP, it would still make markets for large exchanges and launched Circle Trade to provide large-scale crypto asset OTC services to institutional clients.
In February 2018, Circle announced that it would acquire the cryptocurrency exchange Poloniex for $400 million , officially entering the cryptocurrency exchange field. The financing of this acquisition was led by its major shareholder IDG Capital.
In May, Circle continued to announce financing news, announcing that it had received US$110 million in financing, led by Bitmain, with IDG Capital, Breyer Capital and other old shareholders following suit.
It is worth noting that the lead investor Bitmain was also invested by IDG Capital. According to TechFlow, it was IDG Capital that made it possible for Bitmain to lead the investment. At this time, IDG was already Circles largest institutional shareholder.
This investment was unusual for Circle. On the one hand, it was financed at an extremely high valuation of US$3 billion after the investment. Less than a year later, its valuation fell by 75%.
Secondly, in the second half of 2018, the crypto market ushered in a brutal bear market. Both Circle and Bitmain faced a life-and-death test. This money helped Circle to overcome the difficulties to a certain extent.
With the capital injection, Circle began to attack from all sides, trying to achieve full success.
In July 2018, Circle launched USDC, a stablecoin pegged to the US dollar. Looking back, this was undoubtedly a historic moment, and Circle made the most important decision for it.
In addition to its core exchange and stablecoin businesses, Circles layout has also begun to extend outward.
In October 2018, Circle acquired the equity crowdfunding platform SeedInvest and established Circle Research to output cryptocurrency industry news and reports.
So far, driven by capital, Circle has become a comprehensive cryptocurrency group with exchanges as the core and diversified development of stablecoins and OTC: Poloniex provides trading services; Circle Pay provides transfers; SeedInvest is used to raise funds; Circle Trade provides over-the-counter trading services; USDC is a US dollar stablecoin.
Everything seems to be going well, but little do we know that winter has arrived and this diversified layout is extremely dangerous.
2019 was the darkest year in Circle’s history.
In February, Cointelegraph Japan first disclosed that Circle was valued at $705 million on the SharesPost stock trading platform. Nine months ago, Circle was valued at $3 billion after receiving a $110 million investment from Bitmain. In less than a year, its valuation plummeted by 75%.
In May, Coindesk reported that Circle had laid off 30 employees, about 10% of its total workforce, and later three senior executives left one after another.
But perhaps what worries Allaire the most is the failure of Poloniex, which he acquired at a huge price.
On May 13, 2019, Poloniex announced that it would remove nine cryptocurrencies from its US user page. This is because according to US law, these tokens are close to the concept of securities, but they are not registered with the SEC, which poses a risk of violation. In October, another six cryptocurrencies were removed from the market, resulting in a huge loss of profits.
For this reason, Allaire has publicly expressed his dissatisfaction with US regulators several times, but he has no choice but to transfer Poloniexs business to Bermuda, where the regulatory environment is more relaxed. On July 23, Circle announced that Poloniex (P Network) will obtain a Bermuda digital asset business license.
But this still cannot prevent Poloniex from losing market share. From a market share of nearly 60% (among compliant exchanges) in 2017, to only 1% in September 2019.
Valuation plummeted, core business suffered setbacks, talent loss...Circle is once again at the crossroads of fate.
At the moment of life and death, Circle chose to cut off its arms to survive. It gradually divested its core businesses from the second half of 2019 and focused on the stablecoin USDC.
In June 2019, Circle announced that starting from July 8, the Circle Pay service will gradually cancel support for user payments and charges, and will eventually completely cancel all support for Circle Pay on September 30.
On September 25, Circle announced that it would suspend the Circle Research project.
In October, to everyones astonishment, Circle sold its exchange business Poloniex to Polo Digital Assets, an Asian investment company operated by the actual controller of Tron founder Justin Sun.
According to SPAC documents later disclosed, Circle lost more than $156 million in its acquisition and subsequent sale of Poloniex.
On December 17, Circle sold its OTC desk Circle Trade to exchange Kraken.
In 2020, Circles crypto investment and trading app Circle Invest was sold to Voyager Digital in the form of equity.
At this point, after a series of downsizing, Circle has transformed from a diversified cryptocurrency group to a stablecoin issuer focusing on the US dollar stablecoin USDC.
Dollar Ambassador
Circles business model for issuing stablecoins is simple and lucrative: the company issues the USDC stablecoin pegged 1:1 to the US dollar, and invests user deposits mainly in short-term US Treasury bonds, thereby earning almost risk-free returns.
Currently, USDC issuance exceeds US$61 billion, equivalent to more than US$61 billion in reserves, invested in US Treasuries (85% managed by BlackRocks Circle Reserve Fund) and cash (10-20% deposited in global systemically important banks).
According to financial statements, in 2024, Circle generated approximately US$1.6 billion in interest income from investing in U.S. Treasuries, accounting for 99% of Circles total revenue.
However, its net profit dropped from US$268 million to US$156 million. One of the hidden risks is the bloodsucking of its partner Coinbase.
In 2018, Circle and CoinBase co-founded the Centre Alliance to launch USDC.
In 2023, the Centre Alliance was dissolved, Coinbase acquired Circles equity, and Circle took full control of the USDC ecosystem, but Coinbase still retained the right to dividends on part of the revenue.
The total supply of USDC can be divided into three parts: Coinbase’s USDC, Circle’s USDC, and USDC from other platforms.
Coinbase: Includes Coinbase Prime and USDC held on the exchange.
Circle: includes USDC held by Circle Mint.
Other platforms: USDC held by decentralized platforms such as Uniswap, Morpho, and Phantom.
According to Circle’s S-1 filing, Circle and Coinbase have the following revenue sharing agreement:
USDC on Coinbase: Coinbase receives 100% of the reserve revenue.
USDC on Cirle platform: Coinbase receives 100% of the reserve income.
USDC on non-Coinbase platforms: Coinbase and Circle each receive 50% of the reserve revenue.
Coinbases share of the total USDC supply is growing rapidly, reaching approximately 23% in the first quarter of 2025, and USDC is currently Coinbases second largest source of revenue, accounting for approximately 15% of revenue in the first quarter of 2025, exceeding staking revenue.
With USDT, the leading stablecoin, difficult to shake in the short term and the adverse impact of the Federal Reserves expected rate cut, and Coinbase sucking profits, Circle is not stable, but its IPO is just in time.
The United States Stablecoin Act (GENIUS Act) was passed by the Senate on May 21 and is currently being reviewed by the House of Representatives. Once formally passed, it will bring significant strategic benefits to Circle.
The core content of the GENIUS Act happens to be Circle’s strengths:
First, it is required that each stablecoin issued must be backed by an equivalent amount of US dollar cash or US debt;
Second, stablecoin issuers must register with the U.S. federal government and disclose their reserves on a monthly basis to ensure the safety of funds and comply with anti-money laundering and anti-crime regulations;
Third, if the issuing company goes bankrupt, stablecoin holders will be given priority for redemption.
Once the bill is passed, compliance-first companies such as Circle will be certified as legally qualified, thereby increasing the trust of institutional investors and ordinary users in USDC.
In the past, traditional financial institutions’ concerns about regulatory uncertainty have been the main obstacle to their adoption of stablecoins. The GENIUS Act will eliminate this obstacle and open up new opportunities for Circle to cooperate with banks, payment service providers and large enterprises to expand USDC’s application scenarios and market share.
In the future, Circle will also shoulder its strategic responsibilities: to become an important executor of the US dollar globalization strategy, while providing strong support for the US Treasury market.
This is also the core narrative after its IPO, the ambassador of the US dollar to the world.
