Axios Pro: Fintech Deals

February 28, 2022

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1 big thing: Squaring Circle’s numbers

Photo illustration of Jeremy Allaire, co-Founder, chairman and CEO of Circle, and Circle's logo.

Circle CEO Jeremy Allaire. Photo illustration: Gabriella Turrisi/Axios. Photo: Eóin Noonan/Sportsfile via Getty Images

Stablecoin heavyweight Circle projected earlier this month its revenue would grow over 6x in 2022, to $562 million.

In one of his first interviews since the deal, CEO Jeremy Allaire told Lucinda why the company believes it will grow so dramatically, despite a pull back in bitcoin prices and SPAC valuations.

  • Allaire also talked through Circle's missed 2021 expectations.

Catchup quick: Circle's USDC stablecoin is backed by a mix of cash and U.S. Treasurys — meaning rising interest rates will likely bolster its interest income.

The company is also seeing a greater diversification of its revenue streams within the broader crypto ecosystem. If bitcoin falls, Circle can still gain from other areas.

  • "We're starting to move into categories that have long been the promise of this technology, but are now actually starting to take hold," says Allaire, pointing to the booms in NFTS, DAOs, and decentralized finance lending all benefiting the business.
  • “We've seen very, very significant growth in borrowing and lending markets for USDC.”
  • It’s also worth noting that stablecoins are often billed as as a safe haven in time of turmoil, and do decouple from the value of bitcoin.

Of note: Previously, Circle estimated $115 million in 2021 revenues, but instead posted $85 million. Allaire attributed the shortfall largely to two factors:

  • The later-than-expected launch of its high-yield lending product, Circle Yield.
  • Taking on an even more "conservative approach" with its USDC reserves, which are now entirely backed by short-duration Treasurys and cash after taking into account "market feedback and regulatory signaling" over the summer.

What to watch: Circle doubled its valuation, from $4.5 billion to $9 billion, at the same time as it gave new guidance. But the new figure not yet been tested in public markets, or been floated to potential PIPE investors.

  • The company does have the option of raising about $750 million after its PIPE from last summer was cancelled with the new valuation.
  • But Allaire is staying mum on any actual fundraising. (And, I promise, I asked thrice!)
  • We will go deeper with Allaire on March 2 at 2:00 p.m. ET when Ryan interviews him as part of our Axios Pro Insights event.

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