Circle Lists on NYSE as Stablecoin Industry Gains Regulatory Favor

Circle, the company behind the popular stablecoin USDC, made a significant milestone as it listed on the New York Stock Exchange (NYSE) under the ticker symbol CRCL. The listing ceremony was marked by an unusually large and enthusiastic gathering, with both the trading floor and galleries filled to capacity. The energy was palpable as NYSE President Lynn Martin and Circle CEO Jeremy Allaire rang the opening bell, accompanied by a roaring applause from the crowd. This event was not just a routine bell-ringing ceremony but a celebration of Circle's journey and the broader acceptance of stablecoins in the financial ecosystem.

The listing of Circle comes at a time when the regulatory environment for blockchain and cryptocurrencies has become more favorable. The Securities and Exchange Commission (SEC) has shown a more accommodating stance, and meaningful blockchain legislation is on the horizon. This regulatory shift has enabled Circle to achieve this significant milestone, marking a moment of accomplishment and validation for the company and the stablecoin industry as a whole.

USDC, launched in September 2018, has navigated through various economic cycles. Initially launched during a period of positive carry from backing assets, it faced challenges during the COVID-19 pandemic when zero-interest-rate policies threatened its business model. However, the pandemic also drove crypto adoption and experimentation. In 2022, as the Federal Reserve aggressively raised interest rates, stablecoins faced both supportive and threatening forces, with higher carry revenues but traumatized markets.

Circle's journey to listing on the NYSE was not without hurdles. The company's attempt to go public through a Special Purpose Acquisition Company (SPAC) deal with Concord Acquisition faced regulatory delays and ultimately terminated in December 2022. The SEC never declared the S-4 registration statement effective, and the transaction "timed out" waiting for regulatory approval. This delay coincided with a period of soaring interest rates, which ultimately boosted the underlying economics of Circle's business.

Now, several years into a 4-5% rate environment, Circle's model has adapted and appears to be working. USDC holders can receive rewards on platforms like Coinbase that are similar to risk-free yields. On-chain cash holdings and collateral can be enhanced with tokenized treasuries. The GENIUS Act on stablecoins is in good shape for passage, which could open up the market for greater stablecoin adoption and participation. The U.S. government has a new potential multi-trillion dollar customer for U.S. treasuries, providing much-needed demand for U.S. debt, which has become a chess piece in global trade. Circle and other stablecoin issuers are enjoying a good carry scenario, although near-term profitability has significant interest rate risk, now under the watchful scrutiny of CRCL shareholders and analysts.