Original Deep Tide TechFlow Deep Tide TechFlow June 4, 2025, 15:00, Henan
This Thursday, following Coinbase, the most important IPO in the crypto market is coming.
Circle, the issuer of the US dollar stablecoin USDC, will be listed on the New York Stock Exchange, with a maximum fundraising expected to reach $896 million, with the stock code CRCL.
However, on the eve of the IPO, a Hong Kong-listed company, China Everbright Holdings, saw its stock price rise consecutively, increasing by 44% over five days, revealing a hidden past of Circle's dealings in China.
Everbright Holdings had partnered with IDG Capital to invest in Circle as early as 2016, becoming its shareholder.
Even in 2018, domestic media reported that Circle might be injected into a certain A-share listed company, leading the Shenzhen Stock Exchange to issue an inquiry letter, and ultimately the listed company had to step forward to refute the rumor.
Circle's frequent connections with Chinese companies also reflect its historical development journey, transitioning from a crypto wallet to an exchange to a stablecoin, filled with hardships and twists.
This article takes you through Circle's historical journey and its connection with China.
The original dream: American Alipay
In 2013, Jeremy Allaire and Adobe Chief Scientist Sean Neville co-founded Circle, headquartered in Boston, marking his third official startup.
Before this, he had founded two listed companies, software company Allaire and online video platform Brightcove, in 1995 and 2012 respectively, accumulating extensive networks.
At its inception, Circle raised $9 million in Series A funding, setting a record for the highest funding amount ever for a cryptocurrency company at that time.
Investors include Jim Breyer, Accel Partners, and General Catalyst, all of whom are investors in Jeremy Allaire's previous company, Brightcove. Rather than investing in Circle, they are investing in Jeremy Allaire himself.
Circle initially did not venture into stablecoins but aimed to create an 'American version of Alipay.'
Circle's initial product form was a digital currency wallet, primarily providing storage for cryptocurrencies (Bitcoin) and fiat currency exchange services, enabling rapid fund transfers using Bitcoin.
For example, international transfers using SWIFT require 3-5 business days for confirmation, but using Circle allows for quick transfers through the path 'cash - Bitcoin - cash,' where Bitcoin serves as an intermediary.
At this point, Allaire was a staunch believer in Bitcoin, believing that achieving a cross-border payment system was just a matter of time. He wanted users to be able to transfer payments without too much hindrance, just like using email or text messages.
Subsequently, Circle began to thrive.
In August 2015, Circle received $50 million in funding led by Goldman Sachs and IDG Capital.
Why did IDG Capital choose to lead the investment in Circle?
This may be closely related to Circle's early investor Jim Breyer, known for his early investment in Facebook; he also has another identity—IDG's investment partner in the US.
IDG's investment paved the way for Circle's connection with China in the future.
In September, Circle received the first digital currency license, BitLicense, issued by the New York Department of Financial Services, allowing Circle to provide licensed digital currency services in New York State.
Similarly, during this year, China's mobile payment market was fiercely competitive, with WeChat quickly grabbing market share from Alipay through WeChat red envelopes. Across the ocean, Circle did not just observe but also launched social payments at the end of the year.
At that time, it was a bold attempt at innovation, but in retrospect, it may stem from its unclear positioning, which laid the groundwork for later multiple transformations.
Connection with China
In 2016, Circle formed connections with many Chinese VCs.
In June, under the blazing sun, Circle successfully partnered with several Chinese capital firms, announcing the completion of a $60 million D round financing, led by IDG Capital, the lead investor in the C round, with Baidu, Everbright, Yixin, Wanxiang, and CICC joining as co-investors.
IDG Capital led the investments in Circle's C and D rounds and joined its board of directors; IDG Capital founder and partner Xiong Xiaoge commented on this investment:
Currently, domestic investments in internet companies are mostly in applications rather than technology. One important reason is that there are relatively more innovations in business models domestically, while technological innovation is relatively less. The US technology that IDG Capital invests in, such as Circle's Bitcoin blockchain technology, generally belongs to the category of 'something that can be done in the US but cannot currently be done in China, or done less effectively than in the US.' However, although technology is invested abroad, IDG Capital's original intention is still to one day bring cutting-edge technology to China and achieve substantial development on the ground; this is our 'Chinese perspective' on investing in a US company.
Not only did Circle attract a multitude of Chinese capital, but it also harbored a 'dream of entering China.'
In early 2016, Circle established an independently operated Circle China company—Tianjin Shike Technology Co., Ltd., meaning 'payments that can be used worldwide.' The company's CEO was Li Tong, an EIR (Entrepreneur-in-Residence) at IDG Capital at the time, with Wanxiang Group's Xiao Feng serving as a director.
Founder Jeremy Allaire stated that Circle would operate under China's regulatory framework and would not hastily launch products without government permission.
In addition, Circle has been communicating and sharing information with regulatory bodies and banks in China. However, our country places a high emphasis on financial security, and conducting payment business domestically requires a third-party payment license. Therefore, Circle's business in China has been stagnant for a long time, being more of a formality than a reality.
According to information from Qichacha, on August 15, 2020, Tianjin Shike Technology Co., Ltd. applied for simplified cancellation and was officially canceled on September 7, exiting China.
Circle's entry into China ultimately became a pipe dream.
Difficult Transformation
In 2016, as the Bitcoin fork and scaling dispute intensified, Jeremy Allaire gradually became dissatisfied with Bitcoin's stagnation, stating in a previous interview, 'Three years have passed, and the development speed of Bitcoin has slowed down significantly.'
On December 7, Circle announced that it would 'abandon its Bitcoin business,' retaining transfer services for Bitcoin and fiat currencies like the US dollar, but users would not be able to buy or sell Bitcoin, stating, 'Circle will shift its business focus to social payments.'
However, in reality, Circle's overall development strategy shifted from payments to trading, 'Jeremy Allaire downplayed the role of Bitcoin (payments) in Circle's business and began to focus more on profit generation,' as reported by Coindesk.
In the cryptocurrency field, what business is the most profitable? Exchanges.
In 2017, Circle publicly stated that despite removing the direct buy and sell functionality for Bitcoin from the app, it continued to act as a market maker for large exchanges and launched Circle Trade to provide OTC services for institutional clients.
In February 2018, Circle announced the acquisition of the cryptocurrency exchange Poloniex for $400 million, officially entering the cryptocurrency exchange field, with financing for the acquisition led by its major shareholder IDG Capital.
In May, Circle continued to announce financing news, stating it secured $110 million in funding, led by Bitmain, with continued participation from old shareholders such as IDG Capital and Breyer Capital.
It is worth noting that the leading investor Bitmain was also invested by IDG Capital. According to Deep Tide TechFlow, it was IDG Capital that facilitated the marriage that led Bitmain to lead the investment; at this point, IDG had become Circle's largest institutional shareholder.
This investment is exceptional for Circle; on one hand, it was financed at an extremely high valuation of $3 billion after investment, and less than a year later, its valuation dropped by 75%.
Additionally, in the second half of 2018, the crypto market faced a brutal bear market, and both Circle and Bitmain faced life-and-death challenges. This funding helped Circle to some extent weather the storm.
With capital injection, Circle began to strike out in all directions, attempting to bloom comprehensively.
In July 2018, Circle launched the US dollar-pegged stablecoin USDC, which in hindsight was undoubtedly a historic moment, marking Circle's most important decision.
In addition to its core exchange and stablecoin business, Circle's layout began to extend outward.
In October 2018, Circle acquired the equity crowdfunding platform SeedInvest and established Circle Research to provide news and reports on the cryptocurrency industry.
Thus, driven by capital, Circle became a comprehensive cryptocurrency group centered around exchanges, developing in stablecoins and OTC: Poloniex provides trading services; Circle Pay provides transfers; SeedInvest is used for fundraising; Circle Trade offers OTC services; USDC is the US dollar stablecoin.
Everything seemed beautiful, but little did they know, the cold winter had arrived, and such a diversified layout was extremely risky.
2019 was Circle's darkest year in history.
In February, Cointelegraph Japan first reported that Circle was valued at $705 million on the SharesPost stock trading platform. Nine months ago, after receiving a $110 million investment from Bitmain, Circle's valuation had soared to $3 billion, but within a year, it plummeted by 75%.
In May, Coindesk reported that Circle had laid off 30 employees, about 10% of its total workforce, and subsequently, three executives left.
But what troubled Allaire the most might be the Waterloo encountered by the heavily acquired Poloniex.
On May 13, 2019, Poloniex announced it would delist nine cryptocurrencies from the pages of US users. According to US law, these tokens approached the concept of securities but had not been registered with the SEC, posing a risk of violations. In October, six more cryptocurrencies were delisted, resulting in substantial profit losses.
To this end, Allaire publicly expressed dissatisfaction with US regulators multiple times, yet felt helpless, ultimately transferring Poloniex's business entity to the more lenient regulatory environment of Bermuda. On July 23, Circle announced that Poloniex (P network) would obtain a digital asset business license from Bermuda.
However, this still did not prevent Poloniex from continually losing market share, from nearly 60% market share in 2017 (among compliant exchanges) to only 1% by September 2019.
Valuation plummeted, core business suffered, talent drained... Circle stood once again at the crossroads of fate.
At the moment of life and death, Circle chose to sever its core business, gradually divesting from it since the second half of 2019 and focusing on the stablecoin USDC.
In June 2019, Circle announced that from July 8, the Circle Pay service would gradually discontinue support for user payments and fees, ultimately completely canceling all support for Circle Pay by September 30.
On September 25, Circle announced it would suspend the Circle Research project.
In October, amidst astonishment, Circle sold its exchange business Poloniex to a company operated by Asian investors, with the actual controller being Justin Sun, the founder of TRON.
According to later disclosed SPAC documents, Circle lost over $156 million in the process of acquiring and subsequently selling Poloniex.
On December 17, Circle sold its OTC desk Circle Trade to the exchange Kraken.
By 2020, Circle's crypto investment trading application Circle Invest was sold to Voyager Digital via equity.
Thus, after a series of streamlining, Circle transformed from a diversified cryptocurrency group into a stablecoin issuer focused on the US dollar stablecoin USDC.
Dollar Ambassador
Circle's business model for issuing stablecoins is simple yet profitable: the company issues USDC stablecoins pegged 1:1 to the US dollar, investing the funds deposited by users primarily in short-term US Treasury bonds to earn nearly risk-free returns.
Currently, the issuance of USDC exceeds $61 billion, equivalent to over $61 billion in reserves, invested in US Treasury bonds (85% managed by BlackRock's Circle Reserve Fund) and cash (10-20% held in globally systemically important banks).
According to financial statements, in 2024, Circle generated approximately $1.6 billion in interest income from investments in US Treasury bonds, accounting for 99% of Circle's total revenue.
However, its net profit fell from $268 million to $156 million, with one hidden risk point being the profit siphoning by its partner Coinbase.
In 2018, Circle co-founded the Centre consortium with Coinbase to launch USDC.
In 2023, the Centre consortium was dissolved, Coinbase acquired Circle's equity, while Circle completely controlled the USDC ecosystem, but Coinbase retained the right to dividends from part of the income.
The total supply of USDC can be divided into three parts: USDC from Coinbase, USDC from Circle, and USDC from other platforms.
· Coinbase: including USDC held by Coinbase Prime and the exchange.
· Circle: including USDC held by Circle Mint.
· Other platforms: USDC held by decentralized platforms such as Uniswap, Morpho, Phantom, etc.
According to Circle's S-1 filing, there is the following revenue-sharing agreement between Circle and Coinbase:
USDC on Coinbase platform: Coinbase receives 100% of the reserve income.
USDC on the Circle platform: Coinbase receives 100% of reserve income.
USDC on non-Coinbase platforms: Coinbase and Circle each receive 50% of the reserve income.
Coinbase's share of the total supply of USDC is rapidly growing, reaching about 23% in the first quarter of 2025, and USDC has already become Coinbase's second-largest source of revenue, accounting for approximately 15% of its first-quarter 2025 income, surpassing staking income.
With the stablecoin leader USDT difficult to shake in the short term and the negative impact of expectations of interest rate cuts by the Federal Reserve, along with Coinbase siphoning profits, Circle found it hard to be stable, but its IPO came at a 'just right' time.
The US Stablecoin Bill (GENIUS Act) was passed in the Senate on May 21 and is currently under review in the House of Representatives. Once formally passed, it will bring significant strategic benefits to Circle.
The core content of the (GENIUS Act) is exactly Circle's advantage:
First, for every stablecoin issued, there must be an equivalent amount of US dollar cash or US Treasury support behind it.
Second, stablecoin issuers must register with the federal government and publicly disclose reserve conditions every month to ensure fund safety and comply with anti-money laundering and anti-crime regulations.
Third, if the issuing company goes bankrupt, stablecoin holders have priority for redemption.
After the bill passes, it will certify compliant-first enterprises like Circle, thereby enhancing institutional investors' and ordinary users' trust in USDC.
In the past, traditional financial institutions' concerns about regulatory uncertainty had always been the main obstacle to adopting stablecoins, while the (GENIUS Act) would eliminate this barrier, opening up new opportunities for Circle to cooperate with banks, payment service providers, and large enterprises, expanding the application scenarios and market share of USDC.
In the future, Circle will also bear its strategic responsibility: 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 following its IPO, positioning itself as a global ambassador for the US dollar.
