USDC Stablecoin Issuer Is Breaking Boundaries With Digital Dollar And IPO Plans

USDC's stablecoin issuer, Circle, is unstoppable.

In the past weeks, it announced a new flashy office on Wall Street, the arrival of a new tech superstar to its board of directors, and partnerships with the national online payment systems of the two largest economies of Latin America.

To secure the approval of its Initial Public Offering (IPO) by the United States Securities And Exchange Commission (SEC), the FinTech firm has embarked on an ambitious strategy to make USDC the world's "digital dollar."

Public Company – Public Seigniorage?

It would be just regular FinTech IPO news if not for one nuance: Circle is issuing money.

Before stablecoins, there were no examples of privately issued money. It was the prerogative of central banks and commercial banks. Cryptocurrencies introduced alternative systems, and private stablecoin issuers managed to enter the formerly restricted zone on those rails.

Currently, central banks and commercial banks are working on similar products. Central bank digital currencies (CBDCs) and tokenized deposits from commercial banks are designed to regain their monopolistic positions. With regulatory support, there is little doubt private money issuers will be swallowed.

What about "public-private" money issuers? This concept hasn't been explored. PayPal is an example of a public company issuing stablecoin, but the majority of its profits (and hence dividends) come from its core FinTech operations.

If Circle succeeds in its plans, it will be the first company to open the seigniorage to the public.

In the case of stablecoins, interest earned on their reserves is the seigniorage that is missing bankers' pockets for the first time in history. Circle and other major private stablecoin issuers make billions of dollars from interest on U.S. Treasury bills that were acquired by generating tokens. Is that a sustainable business for a few private individuals?

Circle is planning to distribute seigniorage to the public.

More Catholic Than The Fed

The dollar is the ultimate international currency—even those who do not want to own it are forced to acquire it to transact in the global economy.

While U.S. authorities and the Federal Reserve have not yet decided on the CBDC digital dollar, Circle is pushing for USDC to be a tool that underpins the dollar hegemony.

Circle's CEO, Jeremy Allaire, has been alluding to USDC as a privately managed central bank digital currency of the United States for quite some time now, citing financial, economic, and geopolitical reasons.

"This is about what is happening with the dollar itself. [Stablecoins] are one of the measures the United States can take to insure that the dollar remains the predominant currency in the age of the internet," remarked Allaire at an event in Washington, DC, in May 2023.

Since the firm announced its plans to go public in January, the narrative has gained shape through several strategic moves at home and abroad.

In the European Union, the FinTech firm secured an Electronic Money Institution (EMI) license from the French regulatory authorities just weeks before the political bloc's digital asset regulation entered into force.

The license made USDC the only major dollar-pegged stablecoin officially available for European customers. Consequently, leading crypto exchanges suggest that EU users switch from other stables to USDC before converting into fiat currencies.

In Asia, Circle has recently partnered with Sony to enable USDC on the entertainment firm's upcoming blockchain Soneium.

The Ethereum layer-two solution, which has the backing of South Korean giant Samsung, has been designed with the needs and preferences of regional users and developers in mind and is set to become a Web3 stronghold chain in some of the most technologically advanced Asian countries.

Last week, Circle announced that it had started to allow direct access to USDC from Brazilian Reais and Mexican Pesos via the countries' national real-time payment systems - PIX and SPEI.

Brazil and Mexico are the two largest economies in Latin America, and their relationship to the dollar has always been tumultuous.

Brazil's president, Lula Da Silva, is currently engaged in building a regional economic organization with its own digital currency. In direct opposition to Circle's plans, the primary purpose of this organization is to reduce the "external vulnerability" of using the dollar as the payment mechanism in regional trade.

Postal Code:  10048, Wall Street, NYC, U.S.

During an event on September 13, the company unveiled its plan to move its headquarters from Boston to New York City.

The new office will open in early 2025 on the 87th floor of the World Trade Center building (postal code: 10048), which is adjacent to the headquarters of all the major league names in traditional finance.

"We are investing in New York. We are investing in America," said Allaire.

In May, the company filed documents with the court to change its legal base from the Republic of Ireland to the U.S. The home-coming move is bound to increase Circle's tax obligations, but on the upside, it makes the firm dutiful and patriotic in the eyes of the U.S. and future investors.

Circle is also creating jobs in its home country. In June, Bloomberg reported that since Circle disclosed its IPO plans, it hired 137 more staffers, an increase of 15% of its workforce, and had 140 other positions waiting to be filled.

Earlier this week, USDT's issuer announced that Google's vice president, Bradley Horowitz, would join its board of directors.

On X, the Silicon Valley veteran who this year was named #10 Seed investor by Business Inside, said that the finance sector has to take the technological leap forward and "reap the same 'internet' benefits we know accrue from open, secure, protocol-based, scalable, etc."

Can Circle's "Digital Dollar" Strategy Convince The SEC To Approve IPO?

This is not Circle's first IPO attempt. The stablecoin issuer tried to go public in 2022 via a merger with Concord Acquisition Group.

At $55 billion, Circle's tokens in circulation peaked in July of that year. But during that ominous year, the Terra/Luna crash, the FTX collapse, and the failure of the Silicon Valley Bank contributed to the SEC rejecting the deal.

While it has only been a year, the crypto outlook is much more positive than at the time. Countries around the world are regulating the industry, and political candidates in the U.S. are showing their support for regulation, too.

Most importantly, Circle is approaching the process in a much more meticulous and strategic way.

Rather than relying on its massive circulation, which, at around $35 billion, is still significantly lower than in 2022, Circle is now opening up roads of adoption that can become huge motorways once they go public. This gives USDC that Wall Street-approved flair and allows the firm to access more capital.