Circle IPO Controversy: Discontent Arises as Encryption Industry Giants Are Left Out

Recently, Circle, the company behind the USDC stablecoin, completed its initial public offering ( IPO ). This was supposed to be a milestone for the encryption industry moving towards mainstream finance, but it has sparked widespread controversy within the industry. A seasoned investor strongly criticized Circle for favoring traditional financial institutions in the IPO allocation while neglecting crypto-native participants, and discussed the dilemma of the core concept of "alignment of interests" within the traditional IPO system.

Circle's IPO pricing was set at $31 per share, above the initial expected range of $24 to $26. The closing price on the first day was $84, and it surpassed $107 a week later. This fully reflects Wall Street's investment enthusiasm for encryption assets, especially stablecoins.

Reasons to be optimistic about Circle stock (CRCL) include:

• This is the first publicly listed investment target focused on the growth of stablecoins.
• The stablecoin market is expected to grow to over $1 trillion in managed assets.
• USDC currently has an asset management scale of 60 billion USD, with an annual growth rate of 91%.

The reasons for being bearish on CRCL include:

• A business model that completely relies on interest rates, with all revenue coming from interest.
• Rely on a trading platform as the issuing agent, which takes about half of the interest earnings.
• Relying on a certain asset management giant, which has partnerships with multiple banks that are trying to enter the stablecoin market.
• Limited revenue and profit growth over the past 3.5 years
• The current stock price valuation of 107 dollars is relatively high.

However, the real controversy arises from Circle's actions during the IPO allocation process. Several encryption funds and companies have reported that they either received a very small allocation or did not receive an allocation at all. These institutions include early users and promoters of USDC, and even some institutions closely related to the underwriters.

A seasoned investor stated that he could not find any native encryption institution receiving reasonable treatment in this IPO. He believes this practice is "utterly ridiculous" and demonstrates Circle's shortsightedness.

The investor emphasized that his criticism was not based on emotions, but on principles. He stated that his company has been at the forefront of the encryption industry for many years, advocating for and fighting for the industry. They have repeatedly exposed misconduct within the industry, even if it meant having difficult conversations with partners.

He believes that Circle's approach to this IPO is completely contrary to the spirit of encryption. Circle did not reward users through any kind of interest-binding mechanism, but instead allocated IPO shares to traditional financial institutions. These institutions are likely not familiar with Circle's business and will not actually use its products.

In response to some critical voices, this investor also made a reply:

1. Regarding being accused of "wanting to take advantage of benefits": he believes that any customer who directly contributes to business growth should receive some form of reward, but an IPO is different from an airdrop, as they are willing to purchase shares at the same price.

2. About blaming the underwriter instead of Circle: He explained that as the issuer, Circle has the final decision-making power regarding the allocation.

3. About the oversubscription of the IPO leading to a general reduction in the allocation ratio: He pointed out that this transaction was not smooth in the early stages and only became popular at the last minute. The genuine demand from early buyers was marginalized in the process.

The investor stated that it remains to be seen whether Circle's IPO allocation will affect its future development. He looks forward to the upcoming institutional shareholding report to see which investors Circle ultimately chose to share its growth dividends.