Everyone’s Talking About Circle. Almost No One Understands How It Actually Works.

Be careful blindly buying the hype and get a plain speak deep dive on who they are, what they do, how they make money, and their growth prospects.

There are a lot of furus out there.

And with them, a lot of noise, misleading soundbites, half-baked ideas, surface-level confidence masking zero foundational understanding. Now we’ve got an army of AI-fed bloggers churning out reheated content like day old Dominos. Dump a ticker into ChatGPT, prompt it for a blog post, and hit publish. And they blast them over and over, putting their garbage through a megaphone, over and over again.

I don’t blame them. Everyone’s trying to make a buck.

But you and I? We don’t need to listen.

Because the world doesn’t need more of that. What it needs, what you need, what we all need is clarity. What we need is sharp thinking. What we need is understanding what really makes businesses tick and what really makes stocks move. We need insight.

When I launched Victaurs, there was no grand strategy. I just needed a place to think clearly. Writing has always been how I consolidate my thoughts and tighten my investing decisions. And somewhere along the way, people started paying attention. Because it turns out when you know what you’re talking about, and you say it without BS, people stick around.

Financials are my thing: banks, fintechs, alternatives, brokers, investment banks. Not from the outside looking in. From inside the machine. And when furus get loud or the market gets chaotic, I help people stay steady. That’s always been my edge; I stay calm when the world isn’t. And I think for myself when furus blast their nonsense at peak volume.

To borrow a line from Bane: while the furus adopted the dark, I was born in it. Molded by it. And the results speak for themselves, but the mission hasn’t changed.

I write Victaurs for three reasons:

First, alpha. Not hollow vibes. Not charts-without-context. Real signals, early positioning, and winners that compound before everyone else sees it. At least that is my hope and I’m buying what I write about too so there’s skin in the game.

Second, understanding. Deep, structural, and practical. No AI-generated soup. You get the insight that actually moves the dial and that I’ve earned over thousands of hours of learning and countless mini failures.

Third, a reminder: your potential is still uncapped. This isn’t just about stocks, it’s about sharpening your edge as a person. I take this very seriously, and I know you all can tell. I live this and it’s fulfilling to share how to keep your head right.

So if you’ve become a free or a paid sub, thank you. And if you’re reading this for the first time, welcome.

Onto the furus soup du juor … Circle.

If you're thinking about investing in Circle, read this first. It's short, sharp, and it’ll save you from making the kind of mistake the furus won't even recognize.

Why Circle?

I’m constantly amazed by how confidently people speak about things they don’t actually understand. Stablecoins. Circle. The “future of money.” You’ll hear them talk at length, weaving in jargon, gesturing toward ideas they’ve never really pinned down. And yet, ask a simple question, how do people make money in stablecoins? And suddenly you’re off on a tangent about mint fees, burn fees, some vague mention of blockchain mechanics, a little bit about 24/7 access, a lot about the future of money, and not one word about the actual engine underneath: spread income.

This happened to me the other day; I was talking to who meant well. Smart person, good person. But when I pressed him on the core economics, it was clear he had no idea how the model actually works. No sense of the real drivers, the real risks, the real reason this whole thing exists. But he was very “techy” and was clearly convicted that “the future is now” and that I should be impressed by his ever so large brains and the distintermediation coming.

So as the CRCL IPO shoots up 200% or 300% and furus jump up and down and tell you how the future of money is with Circle, do you know everything there is to know about it? How it earns money, what matters to its upside, who the competition is, what the risks are, and what has to happen for this to be a good buy today?

If not, you’re in the right place.

And for the record, this write up isn’t coming from a place of cynicism. I’m genuinely impressed by what Circle has accomplished. I don’t know the team personally, but I respect the work. Truly. They built one of the most widely adopted dollar-backed stablecoins in the world, scaled it to over $60 billion in circulation, navigated bank failures, depegs, and regulatory limbo, and still managed to get to the IPO window at a pretty great time. That takes real discipline. It takes product conviction. And it takes operational competence at a level most crypto-native firms never reach. So kudos to the Circle team.

But giving credit doesn’t mean suspending judgment on whether or not we should buy (or short) this thing. We can admire what they’ve built and still be honest about how the machine works. So let’s lay it out, clearly.

Who Is Circle?

Circle is the issuer of USDC, a fully reserved digital dollar with about $60 billion in circulation. It’s designed to store and transfer value across crypto rails, wallets, and payment applications. But at its core, Circle is not a payment company, yet. It is a balance sheet business. The model is straightforward (at least to me as a bank investor) because native crypto users deposit dollars. That’s step one. Step two is, Circle holds those dollars in short-term Treasuries and …. drumroll please … it earns the spread income between them. That yield is called margin in the bank business, and in 2024, it made up nearly one hundred percent of Circle’s revenue.

But Circle does not keep all of it. What most people miss, and what the S-1 spells out clearly, is that between 40 and 60 percent of that revenue goes out the door to Coinbase and other distribution partners. Circle handles the reserves. Coinbase handles the user relationships and the two split the spread. That arrangement works out well for both, but especially for Coinbase in my opinion because that is a hefty fee for being the plumbing and distribution network node.

Circle presents itself as infrastructure, almost a newbase layer for the future of the financial internet. Their stated total addressable market is the entire monetary system. That’s the pitch, our TAM is literally everything. Which is comical, but the reality today is more narrow. Per the Federal Reserve Bank over 80 percent of stablecoin transaction volume is still crypto-to-crypto. It is not merchant payments, it’s not consumer remittance. It’s not integrated into daily financial life. It is routing dollars between exchanges for a PEPE millionaire and a BONK billionaire as they store their gains in something closer to a bank account. This is step one in understanding stablecoins and their ability to disrupt traditional banking, for now it is not mainstream and for it to really moon it has to be. Visa also claims it’s over 90% and by the way their dashboard is great (Visa Stablecoin Dashboard) for tracking volumes.

So they are not yet disrupting payments in anything and while they do offer developer APIs, programmable wallets, and cross-chain tools none of them are material revenue lines yet. For now, Circle is a boring old bank. There I said it. Circle is a bank, the most TradFi thing ever. And for them to functionally operate they have to pay a single party a big chunk of their revenue.

But how profitable is the bank of Circle? In 2024, Circle reported $156 million in net income on that $1.7 billion in revenue. And at least in my mind, the Coinbase scrape ain’t going anywhere and that’s north of $1 billion. It frankly is amazing that this thing IPO’d at $6.9 billion and shot up to $12 billion and then $24 billion which means you’re paying 14x revenue and it’s not like they can just “turn on” the profitability by cutting that $1 billion of Coinbase money. This was the most eye opening part of it all for me in the whole Circle deep dive.

That distribution and transactions costs line item is not going anywhere below. They do not need heavy marketing expense (yet) at least because of it, but that’s a pound of flesh and then some.

Potential Growth Drivers

If Circle wants to grow, the first and most obvious lever is volume. More people using USDC means more dollars sitting in reserve. And more reserves mean more spread income. That’s the entire model. And remember, not my words, but their stated total addressable market is the entire monetary system.

Today, the total stablecoin market is around $250 billion. Circle makes up about a quarter of that. The federal government has floated projections of a $1 trillion or even $2 trillion stablecoin market over the next decade. That sounds exciting until you realize one key detail. Without the ability to pay yield to end users, that kind of growth would require massive behavioral shifts. People would need to hold stablecoins for reasons other than speculation or trading. That is not happening yet and I remain highly skeptical that it will.

The second path to growth is taking market share from Tether. Tether’s USDT holds around $155 billion in market cap, or roughly 60 percent of the total stablecoin universe. If Circle can close that gap, even modestly, the impact on their revenue would be significant. But again, this assumes real user migration. And right now, according to the Federal Reserve, over 80 percent of stablecoin transactions are crypto-to-crypto. Not retail. Not B2B. Not cross-border payments. Just crypto shuffling between exchanges. So while Circle may be gaining share inside the crypto world, they are not even close to transforming payments as we know them.

The third growth driver is interest rates. Circle earns about 4 to 5 percent on its reserves, and keeps roughly half of that after paying Coinbase and other partners. If short-term rates rise, Circle earns more. That’s simple math. But rate-driven growth is not strategy. It is exposure. And it cuts both ways. A hundred basis point increase would lift revenue, but a hundred point cut would hurt. In this sense, Circle’s growth is tied not just to adoption, but to Fed policy.

In the end, all of this points to one conclusion. For Circle to grow into its valuation, more people need to use USDC. That is the core dependency. Everything else, market share, interest rates, revenue split, is secondary. The float needs to grow and that would mean either the market cap of the entire crypto landscape has to go up 2x to 3x (which is possible) or they have to disrupt traditional deposits and payments, which they have not yet.

The Competitive Landscape & Moat

The competitive landscape over the next five to twenty years will be a knife fight. Regulation may give Circle an early edge, especially if the GENIUS Act or a similar framework takes hold. Circle has built its model around compliance. It is U.S.-based, fully audited, and operates inside the existing financial infrastructure. In a crypto market filled with opacity and risk, being a quasi-legitimate business is, ironically, a moat. If regulators decide to reward transparency and reserve discipline, Circle is well positioned to benefit ahead of its more chaotic peers.

Tether proves the stakes. Despite years of controversy around reserves, audits, and offshore entanglements, Tether still dominates the market. It has the liquidity, the integrations, and the inertia. And as of today, it holds the majority of stablecoin market share.

But Circle’s real competition may not be other crypto-native firms. It’s what’s coming next.

PayPal has already launched a stablecoin. It pays yield. It lives inside one of the most trusted consumer fintech ecosystems on the planet. If PayPal chooses to comply with GENIUS Act standards, it may have to stop paying that yield. But it already has what Circle is still building: brand trust, user scale, and seamless distribution.

Then there are central banks. The arrival of public-sector stablecoins is no longer hypothetical. The pilot programs are live. If the U.S. government launches a digital dollar and mandates its use for federal benefits, tax credits, or public infrastructure, the playing field changes overnight. Circle cannot outcompete the government. It cannot out-regulate the Fed.

And beyond the public sector lies the institutional threat. JPMorgan. BlackRock. Goldman. These are firms with deep regulatory history, global client networks, and balance sheets that dwarf everything in crypto. They are already experimenting with tokenized deposits, on-chain funds, and permissioned stablecoin systems. If they decide to take stablecoins seriously, they have the capital, compliance muscle, and client trust to win.

It’s a sobering reality. In the crypto world, Circle is the trusted adult in the room. In the institutional world, it’s not even in the room. Banks like Valley and Banco Popular already manage $60 billion in deposits. JPMorgan alone holds over $2 trillion and spends more than $18 billion a year on technology. If they want to take this space, they can. And they will.

Circle may have a lead for now. But the game is only just beginning.

Industry structure

Circle wants to play in is twofold: deposits and payments.

On the deposit side, the comparison is straightforward as outlined above. USDC is a fully reserved digital dollar. People park cash with Circle, and Circle holds it in short-term Treasuries. That’s not all that different from how a traditional bank treats deposits. except banks lend, earn spread, and operate inside a tightly regulated, insured system. Circle does not lend. It earns yield on reserves and pays nothing to the user which is a structural difference. And allegedely there are a lot of deposits “at risk”, but I’m here to tell you they are not at risk yet.

On the payments side, the dynamics shift. Payments are a tollbooth business. Every firm in the chain clips basis points off volume. Visa and Mastercard make about 150 to 200 basis points per transaction through interchange fees. Stripe charges around 3 percent at the top, but nets closer to 30 to 40 basis points after passing through network costs. PayPal clears around 170 to 180 basis points. Wise, which focuses on cross-border transfers, takes about 50. These are proven, scaled economics built on top of global transaction flow.

Circle does not yet earn on movement. It earns on stillness. The money sits in Treasuries. Circle collects the yield. There is no large fee when USDC changes hands, no toll when it moves across chains, no big take on transaction volume. This is a critical distinction. They are not a payment company, at least not yet.

The S-1 does mention mint and redemption fees, which are the closest thing Circle has to transactional economics. These fees are small, between 3 and 10 basis points, and apply only to large institutional flows, typically above $2 million. Even then, Circle notes that many of these fees are waived. So while they’ve planted the infrastructure to begin monetizing flow, they haven’t yet chosen to turn it on in a meaningful way.

That’s the reality of the business today. Circle is a macro-levered float collector, not a payment rail. And even as they posture toward infrastructure, they are not in the stack alongside Visa or Stripe. They are not at the point of sale. They are not embedded in checkout. They are not yet part of the system they claim as their addressable market.

USDC is a meaningful tool within the crypto ecosystem, but that ecosystem remains small relative to global commerce. This means Circle’s core product is not yet tied to the movement of goods, services, or regulated value. It is tied to speculation and liquidity in crypto markets.

Even within crypto, Circle does not control its own distribution. Coinbase is the primary on-ramp for USDC, and that relationship comes at a price. Circle gives up a meaningful share of its reserve income to secure placement and scale. The economics are clear. They do not own the channel. They lease it.

This matters. Because infrastructure companies don’t rent distribution. They build it. They embed into the rails. They clip the flow. Circle, for now, does none of that. It earns when dollars sit still, not when they move.

So while Circle positions itself as infrastructure, the actual structure of the industry says otherwise.

What Has to Happen To Be a Winner

I saw some absolutely brain dead takes this week on Circle. So instead of dunking on them I’ll point out what has to happen for you to win buying this thing now.

Circle is currently valued at $25 billion on $1.7 billion in revenue. For simplicity, let’s assume a 5 percent gross yield on reserves and a 50 percent rev share to Coinbase. That gives Circle roughly a 2.5 percent net yield on its USDC float. Everything else flows from that.

Rather than speculate on what might happen, let’s walk through what has to happen for this to make sense. An 8x revenue multiple is already generous. It’s what you might pay for a mature fintech with durable growth and expanding margins. So at $25 billion, Circle needs to produce $3.1 billion in net revenue to justify the price.

To get there, they need to double their USDC float to $125 billion and hold rates steady. That alone would get them to the revenue required to look fairly valued. If float grows to $200 billion, Circle would generate about $4 billion in revenue and start to look cheap at 6x. At $400 billion in float, you’re looking at $8 billion in revenue, which brings the multiple down to 3x. That’s where the math starts to look compelling.

But it cuts both ways.

If Circle doubles its float to $125 billion and rates drop 100 basis points, net yield falls to 1.5 percent. Revenue drops to $1.875 billion. That puts you right back where you started, paying 13 to 14 times revenue for a low-growth, rate-sensitive business. If rates drop 200 basis points, Circle earns $1.5 billion. You're paying a fintech multiple for what is, functionally, TradFi bank. Please don’t ever do this, it never ends well.

To close this gap, Circle needs to do one of two things. Either it convinces users to pay real fees, say 5 to 10 basis points for infrastructure like wallets, APIs, or tokenized money markets, or it renegotiates its deal with Coinbase to keep more of the spread. The first is possible, but unproven. The second is unlikely, and probably not in Circle’s control.

There’s quite a bit of hopium in this thing.

Closing Thoughts on Circle

Circle is a well-run company with a strong compliance posture in a sea of degenerates. But that’s not the same as being a good stock.

The business earns yield on float and splits it with Coinbase. That’s not a payment network with a TAM of everything. It’s a wholesale money market fund with a slick UI. Most of the volume is still crypto-to-crypto. Most of the growth depends on macro conditions. And at least half of the value creation accrues to partners, not to Circle itself.

For Circle to grow into its $25 billion valuation, a lot has to go right. I mean a lot, USDC float needs to double and rates need to hold. And take rates need to expand. Oh, and competition needs to stay quiet or almost oblivious to money rushing into stables. And we need none of the mega banks to realize if their deposits start leaving for the greener pastures of stablecoins. Let me be clear, none of that is happening yet. And until it does, this is a bank. A really cool, slick, TradFi boomer bank trading at 14x revenue.

And remember, IPOs often sell off after lock-up expirations. When the lock-up ends, typically 90 to 180 days post-IPO, insiders and early investors can finally sell. That release of supply hits the market hard, especially if the stock is up and insiders want out. It doesn’t happen every time, but it happens often enough to expect it, especially when the valuation’s rich.

Circle’s earned respect. But the market is pricing in a transformation that hasn’t happened. I’ll be watching. I’ll be rooting for them. But I won’t be buying. And depending how dumb this run gets, I’ll probably short it.

Until next time,

Victaurs

PS - if you made it this far an missed my original stablecoin piece check it out here.