Circle's $1.1 billion IPO shows Wall Street is taking stablecoins seriously, as crypto company's stock nearly triples

By Steve GelsiThe cryptocurrency company, which offers fully backed digital money for rapid global payments around the clock, priced its IPO above the expected rangeCircle Internet Group Inc.'s stock nearly tripled after the stablecoin issuer's initial public offering on Thursday, in a strong sign that Wall Street is taking digital currencies more seriously.Circle's stock (CRCL) ended trading at $83.23 a share at the closing bell, up 168.5% from its offering price of $31 a share, for the strongest first-day gain in at least four years among larger U.S.-based IPOs.It has emerged as a new blue-chip-size company, with a current market capitalization of nearly $19 billion based on its closing stock price of $83.23 a share.Circle's stock opened at $69.33 a share and more than tripled from its offering price during the course of the trading day, with a session high of $103.75 a share.As a specialist in global payments and 24/7 financial markets, Circle is raising money to help expand the use of its USDC digital currency, which is redeemable 1-for-1 with the U.S. dollar DXY.The frenzied investor interest in Circle's IPO, which was reportedly oversubscribed, comes after bitcoin (BTCUSD) recently reached a record high above $110,000, and as the cryptocurrency market becomes more legitimized - as evidenced by the addition of crypto broker Coinbase Global Inc. (COIN) to the S&P 500 index SPX in May.With gains as high as 200% during the trading day, Circle Internet's stock has now generated the largest first-day rise for an IPO since 2020, according to Jay Ritter, a finance professor at University of Florida who tracks new issues.On Aug. 5, 2020, BigCommerce Holdings Inc.'s stock (BIGC) rose to $72.27 a share from $24, and the same month, CureVac shares (CVAC) jumped to $55.90 from $16.At last check, CureVac's stock was trading a little below $5 and BigCommerce's stock was trading a little over $5 a share.IPO price was increased ahead of its trading debut as investors piled onCircle raised nearly $1.1 billion by selling 34 million shares at $31 each, through lead underwriters J.P. Morgan, Citigroup and Goldman Sachs. The stock is trading on the New York Stock Exchange under the symbol "CRCL."Bankers for Circle's IPO increased the amount of stock in the IPO from a previously upsized 32 million shares and priced it above its already increased price range of $27 to $28 a share.At its IPO price of $31 a share, Circle's market capitalization would be about $7 billion based on 225.34 million shares outstanding, if underwriters exercised their option to buy additional shares. That's about 4.2 times the company's 2024 revenue of $1.68 billion.Circle generated $64.79 million in net income on revenue of $578.57 million in the three months that ended March 31, up from net income of $48.64 million on revenue of $365.09 million in the year-ago quarter.Cathie Wood's Ark Invest had indicated an interest in buying up to $150 million of Circle's stock at its IPO price.The IPO comes as Congress has been working on a bill to promote cryptocurrencies.Also read: New crypto bill could turbocharge the stablecoin industry: 4 changes it might bringMarket observers said Circle is one of a crop of more seasoned fintech companies that had planned to go public in 2020 and 2021, when financial-technology companies were commanding much higher valuations.Now that Circle, along with crypto and stock broker eToro Group Ltd. (ETOR), has drawn strong interest in its public offering, other fintech IPOs are set to follow.Those include digital bank Chime Financial (CHYM), which is on deck to go public in coming days, as well as expected deals from buy-now-pay-later company Klarna Group (KLAR) and ticket seller StubHub Holdings (STUB), said Brianne Lynch, head of market insight at EquityZen, a company that helps investors trade privately issued stock."With a crypto-friendly administration and legislation in Congress that could regulate and legitimize stablecoins, plus growing interest from traditional financial institutions exploring their own coins, the market is showing strong signs of support," said Lynch.Since its launch seven years ago, Circle's USDC stablecoin had been used for more than $25 trillion in on-chain transactions as of March 31, including about $6 trillion in the first quarter, the company said in its IPO prospectus.As of May 23, more than $61 billion of USDC was in circulation."Thousands of companies and developers have integrated with USDC, creating a thriving ecosystem," the company said. "Major payments companies, enterprise technology firms, consumer internet applications, financial-technology firms and digital-asset companies use Circle technology to power solutions built on USDC."The purpose of the USDC digital currency is to speed up transactions through a regulated digital currency that offers near-instant settlement worldwide at any time.Uncertainties remain in the cryptocurrency world, which will be affected by the bill working its way through Congress.In 2023, USDC faced an extended period of circulation decline due to an increase in U.S. short-term interest rates, a decline in digital-asset prices and an associated decline in leverage in the digital-asset trading ecosystem, the company said."We will no doubt continue to face challenges in the future," the company said. "Nonetheless, the growth of USDC and the Circle stablecoin network has shown resilience and allowed us to become a strong and thriving business in a short period of time."Global financial crisis was an 'inflection point' for Circle co-founderCircle Internet co-founder and CEO Jeremy Allaire said in the company's IPO prospectus that starting early in life, he considered himself an "internet maximalist" who, after growing up with an Apple II (AAPL) computer in his home, believed in the power of the web to improve people's lives.When the global financial crisis hit in 2008-09, Allaire said, he realized that the financial-services industry had failed and put the world economy at risk."As I dug into the history of banking, money, central banking, and the international monetary system, I became convinced that we needed a new architecture for the financial system, one that was rooted in the internet - built on open networks, open software, and global integration ... to create what could ultimately become a safer financial system," he said.Allaire and Circle Internet co-founder and current board member Sean Neville immersed themselves in cryptocurrency and blockchain technology and launched the company in 2013."It became extremely clear ... that a major new layer of the internet was being born, one that provided a new set of open protocols that would do to the exchange of value what earlier protocols had done to the exchange of data and communications," he said.Becoming a publicly traded company is a "continuation of our desire to operate with the greatest transparency and accountability possible," Allaire said.At its IPO price of $31 a share, Allaire's stake of about 18.58 million shares of Circle Internet has a value of $576 million. That's after his planned sale of about $49 million in stock, or 1.58 million shares, in the IPO. Neville's holdings are worth about $154 million. He has disclosed plans to sell 1 million shares, worth $31 million at the IPO price.Other principal shareholders of Circle Internet include entities affiliated with Accel, Breyer, General Catalyst Group, IDG Capital and Oak Investment Partners.-Steve GelsiThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.