Author: Matt Hougan, Bitwise
Compiled by: AididiaoJP, Foresight News
Even considering the recent concerns raised by the CLARITY Act, my conservative estimate values Circle at $75 billion by 2030.
One of the most common questions we are asked is: 'How to invest in stablecoins?'
Typically, we suggest focusing on crypto assets that support the stablecoin ecosystem, such as Ethereum, Solana, and Chainlink, or on crypto companies operating in the space, such as Circle and Coinbase. Since it's difficult to predict who will benefit the most from the rise of stablecoins, one view is that investing in the entire sector is a reasonable choice.
However, among the many options, one opportunity stands out particularly, which is Circle—the issuer of USDC, the world's second-largest stablecoin. It is the only publicly listed company with a pure focus on stablecoins. In my opinion, it is the most straightforward choice.
So, is Circle a worthwhile investment?
Today is a good day to answer this question because the stock recently fell sharply (down 20% on Tuesday) due to news that the latest draft of the CLARITY Act imposes restrictions on platforms paying interest income to stablecoin users. I believe the market's reaction is somewhat excessive.
To illustrate this, it's necessary to examine Circle's future from a macro perspective.
Three Key Questions Determining Circle's Future Direction
1. How large will the stablecoin market be?
The first question concerns the potential growth scale of the stablecoin market. There are various predictions, with the most widely cited being the research report from Citigroup. The report's "base case" predicts that by 2030, the assets under management (AUM) for stablecoins will reach $1.9 trillion; the "bull case" prediction is $4 trillion.
The news related to the CLARITY Act has not changed the above base case prediction. To date, interest income has not been a primary driver of stablecoin growth; currently, the vast majority of stablecoins are held in ways that do not generate interest. Stablecoins are popular because they enable efficient, reliable global fund transfers, suitable for various scenarios such as trade settlement, lending collateral, and as an alternative to unstable fiat currencies.
Convenience is the core application value of money, and this is where stablecoins excel. Currently, the national average savings account yield in the U.S. is about 0.60%, and the average checking account yield is about 0.07%. Users keep funds in such accounts not for the purpose of seeking yield. If the global financial system continues to migrate towards blockchain-based infrastructure, I expect stablecoins will play an increasingly important role in this transformation, regardless of whether they offer interest.
In my judgment, the base case prediction proposed by Citigroup is actually quite conservative. Nevertheless, to adhere to conservative analytical principles, we will use the $1.9 trillion figure as the basis for subsequent estimates.
2. What market share will Circle's USDC capture?
Currently, Circle's USDC accounts for 25% of the total stablecoin market, behind Tether's USDT.
(Why not invest in Tether? Because Tether is a private company and cannot be invested in publicly.)
Stablecoin Market Cap Distribution
Source: Bitwise Asset Management, data from The Block. Data coverage period: January 1, 2020, to March 23, 2026. Note: 'Other' includes BUSD, crvUSD, DAI, FDUSD, FEI, FRAX, GHO, GUSD, LUSD, MIM, PYUSD, TUSD, USDD, USDe, USDP, and USDS.
There is a common view that as large institutions like U.S. Bank, Stripe, and Wells Fargo enter the stablecoin space, Circle's market share will gradually decline.
I have reservations about this. Historical experience shows that innovative companies often defend their early market leadership positions quite well.
For example:
- In 1976, the world's first index fund was created by the then little-known Vanguard Group. Today, Vanguard is the leader in global passive asset management.
- In 1993, the first U.S. exchange-traded fund, SPY, was launched by State Street, which was not a giant in the asset management industry at the time. To this day, SPY remains the most actively traded ETF globally, with assets under management exceeding $650 billion.
- In 1996, the first series of international ETFs was launched by a little-known asset management company called Barclays Global Investors. The company was later acquired by BlackRock for $12 billion, and its business developed into iShares, which now has $5 trillion in assets under management.
We can already see initial signs of Circle fending off competition from well-known companies: In 2023, the global large digital payments company PayPal high-profile launched its stablecoin PYUSD, but the product received little market response. Currently, PYUSD's market share is just over 1%.
Of course, there are also cases where large companies came from behind and squeezed out the pioneers. For example, in the money market fund space, fast followers like Fidelity, Vanguard, and Federated Hermes took most of the market share from the original innovator, Reserve Fund Group. This is noteworthy, especially considering the similarity between money market funds and stablecoins: both take in U.S. dollar funds and invest them in high-quality short-term securities like U.S. Treasuries.
Nonetheless, I still don't believe large banks can easily crush Circle. I believe Circle's market share also has the potential to expand. After all, although Circle "only" holds a 25% share of the overall stablecoin market, its share in the regulated stablecoin sub-market is much higher (Tether's USDT primarily dominates the offshore market). While it's difficult to obtain exact data on Circle's share in the regulated market, I estimate it to be over 80%. If one believes that the growth in stablecoin AUM will come primarily from the regulated market (because banks, fintech companies, and large enterprises tend to choose onshore, regulated stablecoins), then Circle's market share could significantly exceed its current 25% level.
However, for the sake of conservatism in this analysis, I will balance these two forces and assume that Circle merely maintains its current 25% market share.
3. What will Circle's profit margin level be?
The last question is the most complex and critical: How much yield can Circle generate from its deposit assets?
Currently, Circle receives all the interest income generated from the U.S. Treasuries backing USDC. At current interest rate levels, this means its $80 billion in AUM generates a yield of approximately 4% annually.
However, this number does not fully reflect Circle's actual revenue capability, because it must also consider the distribution fees it incurs to acquire the AUM. For example, USDC was co-developed with Coinbase and is the flagship stablecoin on that exchange. Under the relevant agreement, Circle pays all interest income generated by USDC held on the Coinbase platform to Coinbase, which then passes most of it on to users. Circle has distribution agreements with other exchanges as well. Circle's consideration is that by paying fees for some distribution channels, it can initiate a virtuous marketing cycle, thereby attracting assets to flow in directly, at which point Circle could obtain a higher proportion of the revenue or monetize the assets in other ways in the future.
Overall, Circle currently pays about 60% of its revenue to distribution partners. This means that, at current interest rates, its actual "take rate" is approximately 1.6%.
Is this level sustainable? Two major factors need consideration.
The first is the level of interest rates. Circle's interest income is directly linked to market benchmark rates. Fed rate hikes would benefit Circle, while rate cuts would be negative.
The second is the competitive landscape. If one envisions a market with hundreds of stablecoins where users can freely switch between USDC, WFUSD, BAUSD, PYUSD, etc., Circle's ability to maintain its interest income would be constrained. Basic economic principles suggest that competition compresses profit margins.
However, I am skeptical of this. Markets that should theoretically be "perfectly efficient" often are not in reality. Charles Schwab earns billions of dollars annually from the spread between the rate it pays depositors and the rate it earns on deposits, even though clients could simply move to higher-yielding alternatives. But clients don't always act because the core of their value proposition is not yield, but convenience, trust, and business integration. USDC is similar in many ways: users hold USDC primarily for its wide applicability and credibility, not for interest returns. This user stickiness won't disappear overnight.
I would also like to note that the current draft of the CLARITY Act might actually have a positive impact on Circle's profit margins, as it makes it more difficult to distribute interest income to stablecoin holders.
Overall, I believe that as competition intensifies, Circle will face greater pressure on its profit margins in the future. The company may even need to adjust its revenue model, which is a direction Circle is actively promoting. For the purposes of this analysis, I will assume its take rate is halved, reduced to 0.8%.
Conclusion
Answering these three questions does not cover the entirety of Circle's business. As mentioned earlier, Circle has launched its own blockchain, continues to innovate in payment technology, and its non-interest income is growing rapidly. But I believe that examining the company through these three questions allows for an effective 80/20 analysis of its stock value.
Based on the above conservative estimates—a $1.9 trillion market size, a 25% market share, and a 0.8% take rate—the post-distribution cost, pre-other expenses revenue would be $3.8 billion. Currently, the company's actual operating expenses are relatively low, at $144 million in 2025. This means that even if these costs double or triple by 2030, there would still be about $2.7 billion in net profit after taxes. Valuing this at the S&P 500's current average price-to-earnings ratio (28x), Circle would be a company worth $75 billion.
This number is quite significant, about twice the company's current value. This performance is decent, but given market volatility, whether it's worth investing in might require further consideration.
It should be noted that at every step of this analysis, I chose conservative assumptions. If stablecoin growth meets the expectations of Citigroup's bull case scenario, or if Circle's market share grows (as it has recently), or if the company can maintain its current take rate or develop new revenue sources, the valuation result would be significantly higher.
Overall, I can envision scenarios where Circle's value by 2030 is far higher than my rough estimate, as well as scenarios where it is lower. I believe the value of this analysis is that it indicates Circle's current valuation is within a reasonable range. If the development of stablecoins aligns with general market expectations, then even using quite conservative assumptions, Circle can still be seen as an attractive investment target.
