Summary Circle Internet Group (CRCL) generates revenue by tokenizing USD into USDC and investing reserves in Treasury Bills. USDC usually holds roughly 25% of the USD stablecoin market, with Tether (USDT) as the dominant competitor at 70% market share. A recent theft of $270M on Drift brought controversy to Circle for a perceived failure to act. At $88 per share and a $21B market cap, CRCL is a wonderful business at a fair price. Circle Internet Group ( CRCL ) is a major issuer of stablecoins. There's a lot of growth tailwinds for the industry. There's also controversy, and Circle found itself in some. It's worth checking out to see how it affects the stock. Circle's earning power The first thing to understand is how Circle makes money. It's a very simple business. They tokenize real-word currencies, and these tokens are called stablecoins. Their flagship product is their USD stablecoin ( USDC-USD ). USDC accounts for almost all of the stablecoins they mint. Circle's Key Metrics (2025 Form 10K) Circle holds the real USD that is tokenized. They put it into Treasury Bills to keep it pegged to the dollar and earn interest. That's their revenue model. They rely on distributors too, like crypto exchanges, to offer USDC to users. Distributors get a cut of this interest income. If the interest income is more than distribution costs and their own overhead, they're profitable. Right now the market cap of USDC is $78.6B, and T-Bill yields are about 3.6 %. So USDC can currently yield about $2,829.6M for Circle. After distribution costs, this gives them about $1,103.5M in gross profit, and they guided for a high end of $994M in operating expenses. This means they can earn about $110M as they are. Tether, the main competition Circle's main competition is Tether. In fact, Tether is globally the leader in USD stablecoins with their product, USDT ( USDT-USD ). Even Circle's investor materials point this out. It also means this is mainly a rivalry between these two companies. USDC vs. USDT Market Share Data (Q4 2025 Earnings Presentation) USDT typically holds about 70% of the USD market, with USDC usually having about 25%. 2025 closed some of this gap. Tether remains a big leader. So what's the difference? Circle chose the path of transparency and compliance. Tether only recently announced it was having its assets audited. The doubt has always been if they hold T-Bills; some speculate their reserves are put in other assets. USDC has less known risk of de-pegging from the dollar because of this. Other risks related to compliance and risk management are baked into perceptions of USDT and USDC. USDT and USDC Exchange Concentrations (Ark Invest) Positions on exchanges give us an example. USDC is more common on US-based exchanges. Think Coinbase ( COIN ), Kraken, and OKX. USDT is favored outside the US. Drift Protocol heist differentiates products A major event happened on April 1. A team of scammers, working for North Korea, stole over $270M in assets from Drift Protocol. Drift made an official statement that explained how it happened. The scammers worked with the Drift team in person for over six months and were able to compromise Drift devices. CCTP Information ( circle.com ) How does this affect Circle, though? Prominent users on X have pointed out that the compromised assets were flowing through Cross-Chain Transfer Protocol . This is Circle's mechanism to direct flow of USDC through chains. Users believe Circle had a duty to freeze these assets. Tether reportedly froze $4.2B in February, for example. Some believe Circle should have intervened in past incidents too. Circle eventually responded . Written by Chief Strategy Officer, Dante Disparte, he cut right to the chase: Let me be clear about something that is frequently misunderstood: when Circle freezes USDC, it is not because we have decided, unilaterally or arbitrarily, that someone's assets should be taken from them. It is because the law requires us to act. The rest is a detailed explanation, but this is what investors need to know. Circle will act only when the law requires them to act. That's the expectation they're setting. That's the product difference between USDC and USDT. If you like that answer, then USDC is your product. If not, USDT is your product. USDC 1M Market Cap ( coinmarketcap.com ) Is this good or bad for Circle? I think it won't affect them much. USDC's market cap has risen since April 1. People weren't dumping USDC over this, even if some where unhappy. Why it's a buy CRCL's market cap is about $21B. It's a growth multiple from my earlier estimate. That's kind of high, but I think there's growth ahead. One catalyst is asset tokenization on the blockchain. Estimates put asset tokenization into the trillions of dollars. This would increase stablecoin demand because stablecoins would be used to settle transactions. Many, such as IBM , also believe agentic AI will be another catalyst. Smart contracts execute instantly. AI can take advantage of this to scale up volume. This creates more demand for stablecoins. Both catalysts grow Circle's reserves and the yield it can get. That's why I think $88 per share is a wonderful business for a fair price. Risks Main risk is interest rate cycles. The Fed will have a new chairman in May, and he may want to cut interest rates more aggressively. This lowers the yield for Circle, even if reserves grow. Related, there are regulatory risks. Circle basically said so in their statement about Drift: There's a gap between policy and technology. Updated policy could put more liability on Circle. Crypto regulation is still young. More heists could occur before policy evolves. Users might vote with their feet and pick USDT or even tokenized money markets when those become available. Stress tests are best tests With all that said, I think the Drift heist was a stress test. It showed what kind of product USDC is and what CRCL investors can expect. The Drift heist happened because that company did not secure itself. I think we'll see USDC sort into users who operate onchain with better risk management and don't need Circle's intervention. This could be a better quality of customer over time and leave Tether with more fires to put out. It's just a thought, but it's why I feel good rating CRCL as Buy. I only downgraded it because of the higher price since last time.
