Circle IPO Controversy: The Struggle Between the Encryption Industry and TradFi

Recently, USDC stablecoin issuer Circle completed its initial public offering (IPO), sparking widespread controversy within the encryption industry. The Chief Investment Officer of a certain investment institution, an important player in the industry, expressed sharp views on the matter, criticizing Circle for favoring TradFi institutions in the IPO allocation while neglecting the long-time supporting encryption native players.

Circle's IPO was priced at $31 per share, above the expected range. It closed at $84 on the first day of listing and surpassed $107 a week later, demonstrating strong interest from traditional Wall Street in the stablecoin business.

Reasons to support Circle stock include:

• As the first listed investment target focusing on stablecoin growth
• The stablecoin market has immense potential, with assets under management expected to exceed $1 trillion.
• USDC currently manages $60 billion in assets, with an annual growth rate of 91%.

However, there are also some potential risks:

• The business model is overly reliant on interest income.
• Dependence on partners such as Coinbase
• In recent years, revenue and profit growth have been slow.
• The current stock price valuation is relatively high.

Even more controversial is Circle's approach in the IPO allocation. Several industry insiders have reported that cryptocurrency funds that have long supported USDC received very little or even zero allocation, while traditional financial institutions were given priority. This is seen as contrary to the core principle of "alignment of interests" in the cryptocurrency industry.

Critics point out that Circle should reward those cryptocurrency-native institutions that have promoted the use of USDC and provided support at critical moments over the years. Allowing these institutions to benefit would facilitate the inflow of funds back into the encryption ecosystem, creating a virtuous cycle.

However, Circle's choice to allocate IPO shares to traditional financial institutions that may not understand its business is seen as a "betrayal" of the spirit of encryption. Critics argue that this approach is shortsighted and could harm long-term development.

In response to some voices of doubt, critics have also made replies:

• IPO allocations are different from airdrops; encryption institutions are willing to purchase stocks at the same price.
• The final allocation decision rests with Circle and not the underwriters.
• The so-called "25 times oversubscription" may just be surface data.

This controversy reflects the struggle between the encryption industry and TradFi, as well as the clash of values faced during the industry's development process. Whether Circle's actions will affect its future development remains to be seen, but it undoubtedly serves as a wake-up call for the industry.