Can Circle’s IPO boost USDC in its fight for market share?

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Circle filed for an initial public offering (IPO) on January 11 with the US Securities and Exchange Commission (SEC). Given that the firm will issue the second largest stablecoin by market cap, USD Coin (USDC), it is important to know how this move will affect USDC's role in the market.

Analyzing the stable coin market over a period of one year, a significant loss in market share can be seen in the USDC. The stablecoin issued by Circle had a market cap of $42.7 billion on January 30, which has fallen to $26.4 billion at the time of writing, representing a 38% loss.

Meanwhile, USDC's competitor, Tether USD (USDT), has a market cap of $96.1 billion, four times the market share of Circle's stablecoin. If a circular IPO can give the USDC a boost, now is a good time for it.

Regulatory landscape

Before analyzing how Circle's new move will affect the reliability of the stablecoin in the eyes of retail and institutional investors, it is important to review the US regulatory landscape. At both the federal and state level, crypto is still a topic of uncertainty, explains attorney and FireBlocks consultant Nicole Dinstant.

There is uncertainty in the classification of digital assets, exchanges and custodians, including the authority to regulate the subject SEC or CFTC. [Commodity Futures Trading Commission]. (SEC vs. CFTC). “Although some related bills are being considered around the country, including bipartisan bills led by members of Congress from both US parties, such bills have not been voted on,” Descant explained.

Therefore, from a regulatory perspective, it is difficult to predict how Circle's IPO will affect the USDC. Additionally, the SEC's investigations into whether PYUSD, PayPal's stablecoin, is a security or not, and whether the market, particularly institutions, are inclined to use USDC.

Related changes

Although Circle's IPO does not signal confidence among USD investors, it could still bring about fundamental changes in the market. Dan Yamamura, founding partner of Brazilian asset manager Fuse Capital, highlighted that the USDC issuer's plan to go public could create a measure of transparency in a stable coin market.

“When a company goes public, it should show a level of transparency that is important to a stablecoin issuer. This is the first positive change I see, and it applies to the stablecoin market in general,” Yamamura speculates.

A public listing would provide the company with an injection of capital, according to Circle, specifically Fuss' founding partner. As a result, Circle will have more resources to invest in technology and marketing, two key tools to boost USDC's growth and make it more competitive with USDT.

Another criterion, and the final change that a successful IPO could bring about according to Yamamura, is a reference point for evaluating publicly listed stablecoin issuers. “Understanding how to evaluate those publicly listed issuers will be beneficial to a stable coin market,” said Fuze's founding partner.

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