Summary The GENIUS Act paves the way for stablecoin regulation, positioning Circle and USDC as key beneficiaries of this legislative clarity. Stablecoins, especially USDC, could revolutionize global payments, offering instant settlement, low fees, and broad accessibility—potentially capturing a multi-trillion-dollar market. Circle's dominant transfer volume and regulatory compliance give it a strong edge, but risks include heavy revenue sharing with Coinbase, competition, and yield dependency. Despite a high valuation and notable risks, I rate CRCL a buy and recommend accumulating shares on dips for long-term exposure to this transformative sector. Thesis Summary Congress just passed the GENIUS Act, laying the groundwork for stablecoin regulation and implementation. Circle ( CRCL ) , which recently went public and is the company behind USDC ( USDC-USD ), one of the most dominant stablecoins, could be a significant winner from this legislation. Stablecoins could potentially revolutionise payments, and even a small slice of this large market could be worth trillions. Though the stock has already rallied a lot since its IPO, this one is worth holding for the long term, although there are meaningful risks investors should consider I rate CRCL a Buy, and suggest getting some exposure while leaving plenty of dry powder to add to the dips. The GENIUS Act The United States Senate has just passed the GENIUS Act, which means that dollar-backed stablecoins like USDC will not operate under federal supervision. The GENIUS Act lays out the basic rules for stablecoins, like maintaining full 1:1 reserves and keeping transparent bookkeeping. This is something USDC was already doing, unlike Tether ( USDT-USD ). This new bill will now move over to the House, where it may also be merged with other crypto legislation like the STABLE Act. It is likely that the bill will become law sometime before August. Why Stablecoins Matter While a lot of people may see stablecoins as just another crypto-adjacent fad, nothing could be further from the truth. Stablecoins represent the net evolution of fiat money, which is very different from crypto or Bitcoin. Stablecoins offer significant potential advantages over today’s digital money. Instant settlement No intermediaries Near-zero fees No chargebacks Easy Programmability And most importantly, no barriers to entry. Through USDC, almost anyone in the world can get instant access to the USD, Treasuries and any app, product or investment that can be linked to it. This has already been proven in many ways, with USDC and Tether operating for years now, and various DeFi products offering yield on these coins. The next big step will be for stablecoins to offer a better alternative to payment processors and credit cards. This is likely why, while Circle rallied yesterday, we saw Mastercard ( MA ) and Visa ( V ) take a big hit. How Circle Fits In Circle is by some measures the most dominant player in the Stablecoin market. In terms of market share, it holds 26%, second to Tether. Stablecoin Market Sare (Artemis) However, it is the largest stablecoin in terms of transfer volume, accounting for around 58% of the market. Circle has issues around $60 billion in USDC, and it generates income by generating yield on the Treasuries that back up the stablecoin. Circle Income statement ( Circle Q1) Back in 2024, the company generated around $1.5 billion in interest on a $60 billion supply of USDC. However, we can see that a big chunk of this went to distribution and transaction costs. A big chunk of this is due to an agreement with Coinbase ( COIN ), which receives 50% of the revenues USDC generates. More on that later. Growth Forecast: Trillion Dollar Opportunity According to a report from Standard Chartered and Zodia Markets, stablecoins represent around 1% of the total US Money Supply and FX transactions. The report also speculates that this could grow to around 10% of the total supply. If this can happen, which seems reasonable based on all the advantages of stablecoins and USDC can reach a dominant market share, say 50%, which make sense if we look at transaction volume, and the fact that USDC is the only real large “legitimate” player, since USDT does not follow the current regulations, then this is a possible forecast for revenues. Circle Forecast (Author's work) By 2035, USDC could have over $1 trillion in circulation, with revenues reaching around $26 billion, which implies an effective return rate of 2.5%. This also implies a CAGR of nearly 30% over the next decade. This would put Circle in the revenue ballpark of Visa, which commands a $600 billion valuation. Risks With a look at the table above, Circle looks like a screaming buy, but there are at least three very important risk factors to consider Coinbase Partnership As it stands right now, 50% of Circle’s revenues go to Coinbase. This agreement seems to be open-ended, but it could be renegotiated. This deal made sense initially, as Coinbase was a key strategic partner, but this could change as the balance of power shifts. The deal will automatically renew in August 2026 , but Circle could look to renegotiate the terms then. Competition USDT is also a big player that could still de-throne USDC and even take market share. And where there’s money to be made, there will be plenty of new competitors. I like the fact that USDC is already established and has regulatory compliance though. In some ways, I see USDT and USDC as the Visa and Mastercard of the future. Yields Most of USDC’s business, right now, relies on receiving interest from yields. As yields come down, earnings will decrease. Whereas a company like Visa commands a 70% EBITDA margin, Circle’s margins are much smaller once we account for costs and the revenue share. Arguably, a quick move down in yields in the next year could even make the company unprofitable again. Final Thoughts The stablecoin market is on the verge of making a major disruption to money and finance. Not only for FX transactions, but potentially for so much more, including potentially the whole payment market, worth over $5 trillion by 2030 . USDC is very well positioned to benefit, but the valuation is already very high for a company that has to pay out half its revenue to Coinbase and is very dependent on yields. Nonetheless, I want some exposure to this company, and will be looking to buy further as the stock dips.
