Circle IPO Sparks Controversy in the Encryption Community: Is It Going Against the Original Intent of the Industry?

Recently, USDC stablecoin issuer Circle completed its initial public offering ( IPO ), sparking widespread discussion in the encryption industry. As an important milestone in the industry, this issuance was supposed to highlight the encryption industry's move towards mainstream finance, but unexpectedly stirred controversy within the community.

Investment industry insiders have criticized Circle's approach of favoring traditional financial institutions in its IPO allocation while ignoring crypto-native participants, and used this to explore the dilemma of the core concept of "aligned interests" in the traditional IPO system.

Circle completed its IPO last week, pricing each share at $31, higher than the initial expected range of $24 to $26. The closing price on the first day was $84, and by the end of the week, it had surpassed $107. Investment banks clearly made a serious mistake in pricing this IPO, which also reflects Wall Street's heightened enthusiasm for encryption assets, particularly stablecoins.

Reasons to be optimistic about Circle stock ( CRCL ) include:

• The first and only listed investment target focused on the growth of stablecoins in the market.
• The stablecoin market is expected to grow to over $1 trillion in managed assets.
• USDC currently has an asset management scale of 60 billion USD, with an annual growth rate of 91%.

Reasons for being bearish on CRCL include:

• The business model relies entirely on interest rates, with all income coming from interest.
• Rely on Coinbase as the issuing agent, which obtains about half of the interest income.
• Relying on BlackRock, which collaborates with several banks that are attempting to enter the stablecoin market.
• Limited revenue and profit growth in the past 3.5 years
• The current stock price valuation of 107 dollars is relatively high.

Some encryption fund managers stated that Circle's choice to allocate shares to traditional financial institutions rather than encryption-native funds in the IPO allocation is a huge mistake. They should take responsibility for the implicit messages behind this decision.

Many early users and promoters of USDC, including some institutions closely related to underwriters, have reported receiving very little allocation or none at all. This further confirms Circle's tendency to favor traditional Wall Street financial institutions while neglecting crypto-native supporters.

This practice is considered to deviate from the original intention of the encryption industry. Some believe that Circle should have rewarded users and achieved long-term win-win through some kind of interest-binding mechanism, rather than allocating IPO shares to traditional financial institutions that may lack in-depth understanding of the product.

Regarding this criticism, there are also differing opinions that suggest:

• IPO is different from airdrop; investors need to purchase stocks at the same price.
• The decision-making power for allocation lies with the issuer rather than the underwriter.
• Excessive subscription leads to a general compression of the allotment ratio

Regardless, it remains to be seen whether Circle's IPO allocation will affect its future development and the adoption of USDC. Industry insiders have stated that they will closely monitor the upcoming institutional holdings report to understand which investors Circle ultimately chose to share in its growth dividends.

This controversy reflects that in the process of the integration of traditional finance and the encryption industry, how to balance the interests of all parties and uphold the original intention of the industry is still a topic that needs constant exploration.