Circle’s IPO filing raises doubts amid market turmoil and tariff fears

Circle's IPO Plans Face Headwinds Amid Market Turbulence and Financial Concerns

  • Circle’s IPO filing comes amid market turbulence, with equities experiencing significant declines due to Trump’s tariff announcements.
  • The company faces financial challenges including shrinking margins and high spending, which could impact investor interest.
  • Several other crypto companies are eyeing public markets, but most IPOs are expected to be postponed until regulatory clarity emerges in late 2025.

Circle filed its S-1 with the U.S. Securities and Exchange Commission (SEC) on Tuesday, advancing toward becoming a publicly traded company despite challenging market conditions. This move comes after years of delays and regulatory hurdles, and follows optimism in the crypto industry that emerged after President Donald Trump‘s reelection in November.

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The stablecoin issuer’s filing has generated mixed reactions within the crypto community. Some view it as a positive signal for the industry, while others question the timing given current market volatility.

“I believe Circle will be able to price their IPO and raise capital, however it isn’t going to be easy,” said David Pakman, managing partner and head of venture investments at CoinFund. “Generally, companies going public would like to debut during strong equity markets.”

Equity markets have declined sharply since Trump announced reciprocal tariffs on approximately 90 U.S. trade partners. Both the S&P 500 and Nasdaq have dropped 11% and 17% year-to-date respectively, marking one of the worst quarters in recent years. Payments app Klarna announced earlier today it would pause its IPO plans amid the turmoil.

Financial Challenges Raise Questions

Circle’s financial disclosures reveal potential concerns for investors. The company’s shrinking gross margins and high spending levels could make attracting investment difficult, especially as clearer stablecoin regulation might increase competition.

Lorenzo Valente, a crypto analyst at Ark Invest, noted in a post on X: “Circle is currently being priced like a traditional crypto business — cyclical, interest rate-dependent, and not diversified enough. If Circle can evolve to look more like a payments network with high margins and strong moats, its valuation might reflect that.”

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The company’s rumored valuation ranges from $4 billion to $6 billion, approximately 13 to 20 times its adjusted EBITDA. According to analysts, this pricing aligns with Coinbase and Block, but isn’t necessarily attractive given Circle’s recent profitability decline.

Other Crypto Companies Eye Public Markets

Despite market uncertainty, several other cryptocurrency companies are pursuing IPO plans, including Kraken, Gemini, Blockchain.com, Bullish (CoinDesk’s parent company), and BitGo.

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However, analysts at crypto M&A advisory firm Architect Partners predict most IPOs will be delayed until the second half of 2025, after clearer regulations and policies are established.

Mark Connors, chief investment strategist at Risk Dimensions, expressed optimism about the future of U.S.-backed stablecoins: “We do like the prospect for the growth in US-backed stablecoins based on the growing commercial use, shift in U.S. the regulatory and legislative (GENIUS Act) winds and the U.S. Treasury’s incentive to find new buyers of its growing stack of U.S. T-Bills.”

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