The Breakdown - Circle’s Blockbuster IPO Oversubscribed 25x

Episode Date: June 7, 2025

Circle’s IPO blew past expectations, pricing high and oversubscribed 25x, signaling Wall Street’s growing appetite for stablecoin exposure. NLW breaks down the offering’s details, why fintech insiders think Circle is still undervalued, and what this means for future crypto IPOs. Plus, JPMorgan embraces crypto ETFs, Bitcoin treasuries surge, and Congress continues its political theater over the Clarity Act. Brought to you by: Grayscale offers more than 20 different crypto investment products. Explore the full suite at grayscale.com. Invest in your share of the future. Investing involves risk and possible loss of principal. To learn more, visit ⁠⁠⁠⁠Grayscale.com⁠⁠⁠⁠ -- ⁠⁠⁠⁠https://www.grayscale.com//?utm_source=blockworks&utm_medium=paid-other&utm_campaign=brand&utm_id=&utm_term=&utm_content=audio-thebreakdown)⁠⁠⁠ Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the Big Picture Power Shifts remaking our world. What's going on, guys? It is Thursday, June 5th, and today we are talking about Circles Blockbuster IPO. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, the big event happened. Circle is now a public company.

Indeed, they had to upsize their IPO once again as Wall Street crammed into what appeared to them to be a big, juicy, stable coin bet. The final price for the share offering came in at $31 late on Wednesday, another big bump from the 27 to 28 marketed range reported earlier in the week, and an even more significant increase from the initial $24 to $26 range that they had gone out with before that. Circle also increased the number of shares on offer from 32 to 34 million, both of which were a huge expansion from the 24 million shares from the original IPO plan. In addition, Circle has granted the investment bank underwriters the option to sell another

5.1 million shares over the next month if demand-outstrips supply once trading is live. Bloomberg reported that the Roadshow was 25 times oversubscribed. All told Circle set themselves up to take in over a billion dollars from the IPO, with a market value of $6.9 billion and a fully diluted valuation of $8.1 billion. Most of the stock was sourced from founders and original shareholders rather than fresh issuance, so this is a huge payday and a big exit for the team and early investors. The offering, when all was said and done, also wasn't too far off the $9 billion spec deal that fell apart in 2022.

Now, trading is set to begin today after I record, so we'll discuss the first day performance on the Friday show. More broadly, the runaway success of Circles Wall Street Road Show demonstrates to many that the time is now for crypto companies looking to go public. There is a certain element of the deal that is specific to the hype around stable coins. On Tuesday's show, we discussed how BlackRock was interested in taking 10% of the offering and could have some big plans to push circles growth through integrations. But in combination with the successful Eitoro IPO in May, it looks like markets are simply hungry

for new companies with exposure to the crypto sector. Itoro has dropped a little over their first month of trading, but are still 25% above the IPO price offered during the private roadshow. Some big names are still, of course, looking to go public with BitGo and Crack and reportedly making preparations. You got to imagine they're trying to accelerate their efforts because with the current level of volatility in the market, there is no telling how long the IPO window will stay open. Now, focusing back on Circle, a big part of the discussion leading into the IPO was about how this was one of the only vehicles for exposure to stablecoin growth. Aside from hoping that USDC somehow goes to $2 and

being sorely disappointed, retail investors have been unable to access one of the biggest themes of the past year. Ruizhang of 7x Ventures tweeted, the symbolic value of the listing is huge. As the first major stable coin to list on the NYSE, Circle is generating retail excitement globally as people lack direct stablecoin exposure. It's even seeing discussions on non-crypto platforms like Chinese social media site Little Red Book. He noted that most of the popular content on that site is focused around makeup tutorials and lifestyle, but Circle has the two top trending posts at the moment, adding The hype is so real. FinTech developer Vicky Fu believes that even at the boosted valuation, Circle is fundamentally mispriced. She wrote,

Watching Circle's IPO price is fascinating from a fintech infrastructure perspective. Having built payments infrastructure at Circle, I can tell you, when you control money issuance, you're not in fintech anymore. You're in monetary policy. This is structural mispricing. Circle isn't a money market fund. It's a digital dollar infrastructure with quasi-sovereign issuance rights. For context, PayPal has a $70 billion market cap on $1.5 trillion in volume. Visa, a $500 billion market cap on $14 trillion in volume. Circle, a $6 billion valuation at around $12 trillion in volume. The math doesn't work. 25x over subscribe tells the story. Underwriters priced for safety but missed the fundamental

shift. Circle controls the digital dollar printing press. Tomorrow's trading will be a repricing event, not just for Circle, but for the entire digital monetary infrastructure category. The market is about to learn this lesson. Masari CEO Eric Turner commented on how badly the crypto analyst had missed this one, tweeting, I had people telling me the Circle IPO would fail just a month ago. Everyone has underestimated institutional demand. Interestingly, even though they've now gone public,

Chimoth Palahapatia is still talking about an acquisition. He tweets, it would be genius for Ripple or Coinbase to buy Circle. It looks like Circle's IPO is 25x oversubscribed, valuing the company at around $7 billion. If someone can buy it for even 12 or 13 billion, that's a steal, in my opinion, for what this business could be worth in 20 years. Circle has built the entire market structure for stable coins well before it will formally exist in the U.S., i.e. ahead of the genius bill. My prediction?

Stripe, Square, ripple coinbase, they're all going to end up competing with each other for stable coin dominance, which is really good for end businesses and consumers, and probably really bad for terminal margins. The company that builds the most efficient infrastructure and sells it for the cheapest, Cost Plus, with a thin margin on top, will probably take this market. All in all, people are mostly really excited that this went off, even better than expected, and now looks to be a trend of successful crypto IPOs. Staying on institutional market themes, J.P. Morgan is planning to offer loans against crypto ETFs. According to Bloomberg, J.P. Morgan are planning to allow trading to use

crypto ETFs as valid collateral for margin loans. Wealth management clients will be able to include their crypto holdings in net worth and liquid asset calculations when taking out asset-backed loans. The reporting suggests this could extend to assets held off platform, with Bloomberg writing that crypto would be treated similarly to real estate, cars, or art. This is a small but very important change and a first step towards normalizing crypto as an asset class within the financial system. Until now, certain clients have been able to borrow against their crypto ETFs, but those arrangements have been made on a case-by-case basis. Now, shares of iBit will be treated in exactly the same way as NVIDIA stock.

Sources say there would be no wealth limits on the policy change, applying equally to billionaires or small retail traders. The reporting noted that the large banks have now figured out that they need to compete for crypto customers. Morgan Stanley is currently working on a plan to add crypto as a native trading asset on their e-trade platform, and we've also seen asset management firms like Merrill Lynch slowly bring Bitcoin into their investment advisory models, with some expecting the change to be completed by the end of the year. After those changes are made, one of the final hurdles will be adding crypto to traditional prime brokerages. would enable crypto funds to tap much larger pools of capital. The underwriting of crypto risk is still

tricky, so that might take some time and provide an opening for crypto-native firms to build up their own prime brokers. Still, it's a big change and shows the banks are becoming much more comfortable with crypto. Exaggerating just a little, Geiger Capital wrote, wow, J.P. Morgan is now offering their clients loans against Bitcoin ETF holdings. Wall Street realizing that Bitcoin is pristine collateral, liquid 24-7, 365, and globally. Today's episode of The Breakdown is brought to you exclusively by Grayscale. Grayscale is almost certainly a name you know. They've been offering exposure to crypto for over a decade now

and offer over 20 different crypto investment products, ranging from single asset to diversified to thematic exposure to crypto and the broader crypto industry. They have long been innovators at the intersection of Tradfai and Crypto, and one of the benefits for a lot of us is that Grayscale products are available right through your existing brokerage or IRA. Now, of course, investing involves risk, including possible loss of principle. For more information and important disclosures, visit grayscale.com.

Go to grayscale.com to explore their full suite of crypto investment products and invest in your share of the future. A new report from Standard Charter looked at just how large the Bitcoin Treasury company trend has grown already. They found that the top 61 Bitcoin Treasury companies, yes, there is a top 61 Bitcoin Treasury companies now, hold 3.2% of total supply. Half of these companies have an average purchase price above 90,000, so there's not a lot of room for a price job for them.

Standard Chartered views a pain level 22% below the purchase price as a potential liquidation level for these firms. They wrote, Bitcoin Treasuries are adding to Bitcoin buying pressure for now, but we see a risk that this may reverse over time. 58 out of the 61 companies analyzed currently have their stock priced above their Bitcoin holdings, meaning that they have the ability to issue stock to buy Bitcoin without diluting shareholders. Analysts wrote,

For now, we think this is justified by market inefficiencies, including regulatory hurdles to investor access and conservative investment committee processes. But as these inefficiencies are eventually removed, we think Bitcoin Treasuries could become a source of downside price, pressure, and volatility. Maybe the most staggering finding was that Bitcoin Treasury companies excluding micro-strategy have doubled their holdings over the past two months. Their combined treasury went from under 50,000 BTC to around 100,000 Bitcoin, meaning an additional $5 billion worth of Bitcoin flowing into the Micro Strategy clone since April. Micro Strategy itself is still a larger buyer than the others, adding around 74,000 BTC currently worth around $7.5 billion in the same period of time.

Opinions continue to be varied about how sustainable this bubble is. Michael Saylor himself is pointing out that the doomsday scenario of a protracted bear market in Bitcoin isn't necessarily a disaster for his company. He said Micro Strategy had structured its balance sheet to weather a 90% drop for four or five years. However, he noted that, wouldn't be a good outcome for the equity holders. The people at the top of the capital structure would suffer because they're levered, but everyone else in the capital structure would get paid out. Probably worth noting for the retail traders piling into this stock rather than the bonds. CZ tweeted, these companies are taking risks. Every company takes risks. Risks are

not binary like zero or one. Risks are a range from zero to 100. With the right balance, you can achieve the best risk in ROI ratio that works for you. Risks can and must be managed. Not taking risks is a risk in itself. Still, Joe McCann of asymmetric capital, himself no stranger to risk, doesn't think this is particularly sustainable. He compared the trend at the SPAC mania of 2021, noting he's seeing a deal almost every day. McCann commented, this is actually the time, in my opinion, to start raising capital for a distressed fund vehicle. So when some of these companies have to sell their crypto at a meaningful loss, there's somebody with arms wide open willing to pay 10 cents on the dollar. Then again, he did note that this bubble could run for much longer than some expect

before you see a catastrophic ending. Hitting a quick update on the policy side of the House, in Washington, the newly updated market structure bill got its day in front of Congress. Two hearings were held simultaneously split between the House Financial Services Committee and the House Ag Committee. You'll recall that the last time this bill came to a hearing, which was last month, Maxine Waters staged a walkout and prevented it from going ahead in an official capacity. This hearing was split presumably to avoid Waters using the same quirk of procedure to scuttle another joint committee hearing. Water still had plenty of vitriol for the bill, which is down known as the Clarity Act. She said, the only thing clear about this bill is we need to start over. This rushed,

overly complicated bill will increase investor harm, which already runs rampant in today's crypto market. Some of the riskiest activities are broadly exempted from the bill, leaving our constituents with no one to turn to when their money vanishes. The bill puts our national security at risk and contains no penalties for crypto criminals. There were also, of course, further complaints about Trump's conduct, with Waters claiming the president could use the market structure bill to, quote, put people's money in his digital wallet. Not to take the bait too much on this, a vastly hyperbolic talking point, but you would think, perhaps, that putting laws on the books and a market structure in place could be beneficial in dealing with crypto criminals. Fraud is already illegal, so it's not

super clear to some why a market structure bill would need specific penalties. This is a point that SEC Commissioner Hester Perce made at the Bitcoin conference last week, stating, in an environment of regulatory uncertainty, it's actually much harder to identify the bad actors. It ends up giving the bad actors more ability to do bad things. Thankfully, the witnesses were there to discuss the contents of the legislation rather than the president's crypto schemes. Say, for one, none of them addressed this issue in their opening statements, focusing either on the need for legislation or gaps in this proposal. The same could not be said for the Financial Services Committee members, who spent much of the hearing arguing about the president. Republican Indy Barr spent his time firing pot shots across the aisle,

stating, I have to continue to address this red herring that my Democratic colleagues continue to push, this carelessly thrown out accusation and this baselessly politically motivated attack against President Trump. That his support somehow for a regulatory framework for digital asset market structure is somehow corrupt, that he's personally profiting from our agenda to bring clarity to the stable coin in market structure. Firing back, Democrat Jim Himes called the statement, ill-advised than a cheap shot, adding, those of us who might be inclined to support this thing so that it can be bipartisan, are not going to add our names to something that is associated with the rank corruption we see out of the White House. Without that, I am not a yes vote, and I'm going to encourage every

Democrat to be a no vote. And this statement in particular underscores the issue. This bill and the entire crypto agenda has become a referendum on Trump's crypto activities in the eyes of Democrats of all stripes. Crimes has supported responsible crypto legislation in the past, but clearly the current political climate makes it difficult for him to continue to do so. On the substance, the debates were largely about various definitions and the sufficiency of anti-money laundering controls. Former CFTC chair Timothy Mossad also pushed the view that exemptions for Defi were too broad and needed to be reined in. Catherine Minarek, the chief legal officer of Uniswap, made the point that these services are non-custodial and really shouldn't be made responsible for others using their infrastructure.

She said, software developers who never take custody or control of user assets have always been outside of the money transmitter regime. That's for good reason. Her point was that regulations traditionally serve to protect investors from bad faith middlemen, rather than seeking to prevent all crime that traverses a financial system. Still, generally these here, hearings were a meta-discussion about where Washington is on crypto. Jake Chavinsky, the chief legal officer for Variant Fund, tweeted, the Congressional Hearing on the Clarity Act is reminding me of Mark Andreessen on the three-stage response to new tech. Denial, rational counterargument, and then name-calling. The anti-crypto faction is calling it the Complexity Act, as if this is middle school

with no real critique. Consensus lawyer Bill Hughes noted that the industry is asking Washington to think very differently about regulation with this bill, commenting, I will humbly point out that the regulatory principles of do no harm to regulatory agencies and keep it simple, just discussed in the House Financial Services hearing, are quite plainly grounded on the assumption that market regulation today is hunky dory, and all we need to do is empower regulators. Indeed, the unpartainable sin is to restrain them and allow the marketplace to probe the gaps in white space. This puts things on its head. It's a DC-centric view of the world. In DC, tech-neutral actually means fit in this box or die. The rules can't have loopholes actually means the market should only be able

to act with the government's permission. The DC bubble is in some ways worse than market bubbles. Ultimately, it's not that the hearings were useless, but they made it clear that the finer points of the policy are not really being debated in public. Congressional aides have complained that they barely understand the issues at play and have struggled to get the technical assistance they need to understand an extremely dense bill that stretches over 200 pages. So basically, the decision could end up being simply a broad proxy vote on whether lawmakers believe the crypto industry should be facilitated in the U.S. We will, of course, continue to keep an eye on it, but for now, that is going to do it for today's breakdown.

Appreciate you listening, as always, and until next time, be safe and take care of each other. Peace.