The Crypto Market’s IPO Aspirations Amidst Uncertainty
Following U.S. President Donald Trump’s reelection in November, a wave of optimism swept through the cryptocurrency sector as companies set their sights on entering public markets. Trump had made ambitious promises, including the establishment of clearer regulatory frameworks for the industry and aspirations to position America as the global leader in cryptocurrency.
For a brief moment, it seemed that the floodgates for initial public offerings (IPOs) might finally open. Buzz surrounded IPO pipelines, and founders began to envision the moment of ringing the opening bell on Wall Street. However, lurking beneath this optimism were troubling signs. A flourishing bull market is essential for successful public listings, and few could have predicted the tumultuous path that lay ahead.
In a bold move, Circle, the issuer of the USDC stablecoin, decided not to wait for optimal conditions. After grappling with years of regulatory challenges and delays, the company officially filed its S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) on Tuesday, marking a significant step toward becoming a publicly traded entity.
The filing arrived with a mix of enthusiasm and skepticism. While some industry insiders viewed it as a positive indicator—another influential player inching closer to the public markets—others raised concerns about the timing. The current market landscape remains volatile, and Circle’s journey to a successful IPO is fraught with uncertainty.
“I believe Circle will be able to price their IPO and raise capital; however, it will not be an easy task,” stated David Pakman, managing partner and head of venture investments at CoinFund. “Typically, companies prefer to go public during strong equity markets.”
Equity markets have experienced a significant downturn since Trump announced reciprocal tariffs affecting about 90 U.S. trading partners, including major economies like China and the European Union. This announcement has intensified fears of a looming global recession. As a result, both the S&P 500 and the Nasdaq have fallen by 11% and 17% year-to-date, respectively, marking one of the most challenging quarters in recent memory.
Consequently, cloud computing firm CloudWeave, which recently went public, faced a lackluster debut. Although the stock saw a rebound on its second day of trading, driven by strong investor interest in artificial intelligence companies, the initial reception was disappointing. Additionally, payments app Klarna announced earlier today that it has paused its IPO plans, reflecting the broader apprehensions in the market.
Circle is not only contending with the wider market anxieties that threaten its IPO; analysts have raised concerns regarding the company’s financial health, which could pose challenges in attracting potential investors.
“While I have immense respect for Circle and its leadership, their financials reveal the difficulties they’ve faced in achieving growth and the significant costs associated with their distribution partnerships,” Pakman noted, while still expressing optimism about the company’s long-term potential.
Circle’s IPO filing has exposed declining gross margins and heightened expenditures at a time when clearer regulations surrounding stablecoins could usher in increased competition. “Circle is currently being valued like a traditional crypto business—cyclical, dependent on interest rates, and lacking sufficient diversification,” remarked Lorenzo Valente, a crypto analyst at ARK Invest. “If Circle can transition to a model resembling a payments network with robust margins and strong competitive advantages, its valuation could improve accordingly.”
Several elements of Circle’s business structure are under scrutiny, including the evolution of its revenue-sharing agreements and the growth trajectory of Base, the blockchain developed by Coinbase that utilizes Circle’s USDC, according to Valente.
“One precaution Circle has taken is to set a lower valuation. However, significant hurdles remain, as the rollout and implementation of digital infrastructure within the banking system will take time,” stated Mark Connors, chief investment strategist at Risk Dimensions, a Bitcoin investment advisory firm based in New York.
Circle’s anticipated valuation, estimated between $4 billion and $6 billion—approximately 13 to 20 times its adjusted EBITDA—is comparable to that of Coinbase and Block, yet “not necessarily inexpensive, particularly given its recent decline in profitability,” Valente added.
“We are optimistic about the potential growth of U.S.-backed stablecoins, driven by increasing commercial usage, shifts in U.S. regulatory and legislative dynamics (such as the GENIUS Act), and the U.S. Treasury’s incentive to attract new buyers for its expanding portfolio of Treasury bills,” Connors explained. Over $6 trillion in Treasury bills will be refinanced this year, with additional issuances anticipated to support the continually rising U.S. deficit.
Despite the prevailing market uncertainty as the year progresses, numerous other crypto firms are eager to fulfill their IPO aspirations. Companies such as Kraken, Gemini, Blockchain.com, Bullish (the parent company of CoinDesk), and BitGo are among those exploring public offerings. Furthermore, there are reports of additional crypto firms engaged in discussions to go public.
However, it is likely that many others will choose to delay their IPO plans, waiting for clearer regulations and more favorable market conditions. Analysts from the crypto M&A advisory firm Architect Partners predict that the majority of IPO filings could materialize in the latter half of 2025, once comprehensive regulations and policies have been established.
