Circle IPO Sparks Controversy: Encryption Native Institutions Marginalized

Recently, the USDC stablecoin issuer Circle completed its initial public offering ( IPO ), pricing at $31, higher than the initial expected range of $24 to $26. On the first day of trading, it closed at $84 and broke through $107 a week later. This IPO pricing is considered significantly low and also reflects the strong interest of traditional financial institutions in stablecoins.

Circle Investment Logic

Bullish Reasons:

• The market's first public offering focused on the growth of stablecoins
• The stablecoin market is expected to exceed $1 trillion in scale.
• USDC manages $60 billion in assets, with a yearly increase of 91%.

Bearish reason:

• A single business model reliant on interest rates
• Rely on Coinbase as the issuing agent
• Relying on BlackRock's partnership with banks
• Revenue and profit growth has been slow in the past 3 years.
• The current stock price valuation of $107 is relatively high.

Controversy Arising from IPO Allocation

The Chief Investment Officer of a certain encryption investment institution publicly criticized Circle for favoring traditional financial institutions in its IPO allocation, neglecting native crypto participants. He stated:

• Multiple encryption funds reported receiving very small allocations or no allocations at all.
• No encryption native institutions have been found to receive reasonable treatment.
• This shows Circle's shortsighted behavior, deviating from the original intention of encryption.

The investment officer emphasized that the criticism is not based on emotions, but on principles:

• Persist in promoting the correct development and integrity principles of the encryption industry.
• Always speaking out for the industry, exposing misconduct.
• Educate and promote encryption technology to enable investors to make informed decisions.
• Believe it is our responsibility to point out bad decisions in the industry.

Criticism of Circle

The investment officer stated that their institution has been a customer and partner of Circle for nearly a decade.

• Early support for promoting USDC
• Defending USDC and the stablecoin sector
• Provide assistance in product testing, optimization, and crisis.

However, in this IPO, only a very low allocation was obtained, which is a kind of deviation:

• Ignored the deeply involved encryption funds
• Did not allow customers to share financial dividends
• Allocate shares to traditional institutions that may not understand the product

He believes that Circle's approach completely deviates from the spirit of encryption and has missed the opportunity to achieve long-term win-win.

Responding to Doubts

In response to some doubts, the investment officer said:

• IPO is different from airdrop; they are willing to buy stocks at the same price.
• The allocation decision authority lies with Circle rather than the underwriter.
• The order mechanism has strategic behavior, which marginalizes early buyers instead.
• Looking forward to the 13F filing disclosing which investors Circle ultimately chose.

This controversy highlights the contradiction between the traditional IPO mechanism and the principles of the encryption industry. Whether Circle's choice will affect its future development remains to be seen.