From Disruption to Deposits: What Circle’s Rise Signals for Banks

With the signing of the GENIUS Act into law and the recent success of several fintech IPOs, a renewed interest in Stablecoins has reinvigorated market talk that traditional commercial banks could see some pressure on deposit franchises as occurred nearly 50 years ago when Merrill Lynch introduced the cash management account.  Circle Internet Group, “CRCL”, made headlines with its IPO last month and is one of the key players in the current discussion regarding the evolving financial system.

Company Overview

Circle Internet Group, Inc. “CRCL” was founded in 2013 and is the issuer of USDC, the world’s second largest Stablecoin by market capitalization with $61 billion in circulation as of May 2025.  Circle also issues EURC payment Stablecoins.  USDC and EURC are digital currency tokens backed by reserves and redeemable on a one-for-one basis for U.S. dollars or euros, respectively.  USDC was launched in September 2018, and EURC was launched in June 2022.

CRCL primarily generates revenue by investing the reserves that back Stablecoins in short-term U.S. Treasury securities.  From 2020 to 2024, the company grew from $15.4 million in revenue in 2020 to $1.7 billion in revenue in 2024.  CRCL reported $155.7 million in net income and $284.9 million in adjusted EBITDA in 2024.

IPO Overview

CRCL filed for its IPO in early 2025, targeting a valuation of up to $6.71 billion with an initial share price range of $24–$26.  Due to high investor demand, the company upsized its offering and priced the IPO at $31 per share, above the revised range of $27–$28.  The IPO raised $1.05 billion, with the company and selling stockholders offering 34 million shares.  The IPO was highly anticipated, especially given the crypto-friendly regulatory environment under the Trump administration and the growing adoption of Stablecoins.

On June 5, 2025, Circle’s shares began trading on the New York Stock Exchange under the ticker symbol CRCL, opening at $69 per share, more than double the IPO price.  On the first day of trading, the stock reached an intraday high of $103.75 and closed at $83.23, marking a 168% increase from the IPO price.

Stock Performance Since IPO

Since its debut, the stock’s volatility and upward trajectory have been notable.  On its second day of trading, the stock surged nearly 30% to close at $107.70, and it reached a record high price of $298.99 in late June.  CRCL’s strong performance has been fueled by favorable regulatory tailwinds (GENIUS Act), positive market sentiment towards fintech and AI, and the company’s strategic positioning, including Circle’s regulatory-first approach and a recently announced partnership with Fiserv.  As of July 29, the stock price stood at $190.70, or approximately 6x its IPO price of $31 per share.  While some analysts express concerns over competition and sensitivity of revenue to market interest rates, many remain bullish on CRCL’s long-term potential and position in the maturing digital asset landscape.

Banking-Related Takeaways

The success of Circle’s IPO, signing of the GENIUS Act, and increasing confidence in fintech and digital banking could have significant implications for the banking industry. Below are three key takeaways:

1. Increased Adoption of Digital Assets in Banking. Circle’s IPO success signals a growing acceptance of digital assets by traditional investors and institutions.  This trend could encourage banks to integrate Stablecoins and other digital currencies into their services, offering faster and cheaper cross-border transactions compared to traditional methods.  On a recent Banking with Interest podcast episode hosted by Rob Blackwell, Alex Johnson, founder and publisher of FinTech Takes, discusses the impending race between nonbank Stablecoin issuers and banks who need to quickly find a way to tokenize key financial instruments like deposits.  Johnson argues that ultimately, the question of how important it is to be the winner of that race is determined by the utility and use cases of tokenized money.  In considering areas in which Stablecoins might be superior to payment methods already in place and what they might be used for, Jonhson lists five use cases:
   1. As bank accounts for the onchain economy.
   2. A safe place for individuals in countries with less stable currency regimes or less stable inflation to keep their money.
   3. International remittances as Stablecoins tend to work better, reach more places, and be cheaper than correspondent banking.
   4. Potential to be a better version of prepaid closed loop payment systems.
   5. With regulation, Stablecoins might displace banking as a service as the infrastructure of choice for fintech entrepreneurs to build new money apps on top of.
2. Regulatory Clarity and Innovation. The favorable regulatory environment, particularly under the Trump administration’s embrace of cryptocurrencies, could spur innovation in the banking sector.  Developments, such as the recently signed GENIUS Act, aim to establish a regulatory framework for Stablecoin issuers, potentially easing compliance for banks.  This clarity could enable banks to develop new products, such as tokenized deposits or blockchain-based payment systems, enhancing their ability to serve customers in a digital economy. Circle’s application for a national trust bank license post-IPO, if approved, could set a precedent for banks to operate in the digital asset space under federal oversight.   
3. Pressure on Deposits.  There is a lot of discussion surrounding the threat of Stablecoins to traditional banks and the impact on bank deposits.  In the Banking with Interest episode, Johnson says he doesn’t think Stablecoins will result in a massive flight of deposits out of the banking system but do have the potential to accelerate deposit dislocation from small banks to larger banks as Stablecoin issuers will need to custody their deposits somewhere.  In a recent American Banker article, the authors examine the potential increase in banks’ average cost of funds given a shift in funds from bank deposits to payment Stablecoins and the negative impact on households via reduced credit and higher borrowing costs.

About Mercer Capital

The growing presence of Stablecoins, coupled with regulatory clarity from the GENIUS Act, may have long-term implications for deposit flows and banking models. Mercer Capital has decades of experience evaluating disruptive trends and their impact on financial institutions. Please call if we can assist your board in navigating the strategic and valuation considerations of an evolving digital financial landscape.

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