Circle IPO Sparks Controversy: Discontent in the Encryption Industry Towards TradFi

Recently, USDC stablecoin issuer Circle completed the highly anticipated initial public offering ( IPO ). This was supposed to be a milestone for the encryption industry moving towards mainstream finance, but it has sparked widespread controversy within the industry. Some veteran figures in the encryption industry have strongly criticized Circle for favoring TradFi institutions in the IPO allocation while ignoring native participants in the encryption space.

Circle's IPO is priced at $31 per share, higher than the initial expected range of $24 to $26. The closing price on the first day reached $84, and a week later it even broke $107. This performance indicates that the investment banks significantly underestimated the IPO pricing, and it also reflects Wall Street's strong interest in encryption assets, particularly stablecoins.

Reasons to support investing in Circle include:

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

However, there are some concerning factors:

• The business model relies entirely on interest rates, with all income coming from interest revenue.
• Dependence on partners such as Coinbase and BlackRock
• Limited revenue and profit growth over the past three and a half years.
• The current stock price valuation of 107 dollars is relatively high.

Some senior figures in the encryption industry believe that Circle's decision to allocate shares to TradFi institutions rather than crypto-native funds during the IPO placement process is a serious strategic mistake. They point out that many early users and promoters of USDC, including some institutions closely related to the IPO underwriters, failed to receive a reasonable allocation. This approach is seen as a betrayal of long-term supporters and also demonstrates Circle's shortsightedness.

Critics emphasize that their stance is not based on emotional reactions, but rather on principled positions. They believe that when a company has the opportunity to benefit its customers through an IPO, it should choose to reward those institutions that have been deeply involved and continuously invested in the encryption industry. This is not only a gesture of gratitude towards supporters, but also a wise move to promote a virtuous cycle within the entire industry.

However, Circle seems to have chosen a course of action that contradicts the spirit of encryption by allocating a large number of IPO shares to traditional financial institutions that may not fully understand or use its products. This practice raises doubts about whether Circle truly understands and values its core user base.

In response to some criticisms, there are viewpoints that point out:

1. IPO allocation is different from token airdrops; investors are willing to purchase shares at market prices rather than receiving them for free.
2. The allocation decision is primarily controlled by the issuer rather than the underwriter, thus the responsibility lies with Circle rather than the investment bank.
3. The so-called oversubscription may just be a facade on the order book and may not fully reflect actual demand and fairness.

Regardless, Circle's IPO allocation strategy has indeed sparked considerable controversy within the encryption industry. This event has also prompted thoughts on how encryption companies can balance TradFi with the industry foundations in their journey toward mainstream adoption. The future development of Circle and the adoption of USDC will be important indicators to assess the impact of this decision.