Circle IPO Sparks Controversy: Participants in the encryption Industry Criticize Allocations Favoring Financial Institutions

Recently, USDC stablecoin issuer Circle completed its initial public offering ( IPO ), sparking widespread controversy within the encryption industry. Some senior figures in the encryption industry strongly criticized Circle for favoring Financial Institutions in the IPO allocation while neglecting crypto-native participants.

Circle completed its IPO last week, pricing each share at $31, higher than the initial expected range of $24 to $26. The closing price on the first day was $84, and by the end of the week, the stock price had exceeded $107. This demonstrates a serious miscalculation by the investment banks in the IPO pricing and reflects Wall Street's heightened enthusiasm for investing in crypto assets, particularly stablecoins.

Reasons to be optimistic about Circle stock (CRCL) include:

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

Reasons for being bearish on CRCL include:

• A business model that relies entirely on interest rates, with all income derived from interest income.
• Relying on Coinbase as the issuance agent, Coinbase takes about half of the interest income.
• Relying on BlackRock, which has partnerships with many banks that are trying to enter the stablecoin market to compete with Circle.
• The company has had almost no revenue and profit growth in the past three and a half years.
• The current stock price valuation of 107 dollars is relatively high.

However, the IPO allocation process has sparked controversy. Some senior figures in the encryption industry criticize Circle for choosing to allocate shares to Financial Institutions instead of crypto native funds, believing this is a huge mistake. They point out that many early users and promoters of USDC, including some institutions closely related to the underwriters, did not receive a reasonable allocation.

Industry insiders believe that Circle's move deviates from the core principles of the encryption industry and overlooks the interests of long-term supporters. They emphasize that allowing customers and early supporters to share in the IPO profits can create a positive cycle in the industry, benefiting the long-term development of the entire encryption ecosystem.

Regarding Circle's approach, some critics have stated that this is not only a shortsighted action but also a departure from the spirit of encryption. They believe that Circle should have rewarded users through some kind of interest-binding mechanism to achieve a long-term win-win situation, rather than generously allocating IPO shares to traditional financial institutions that may have limited understanding of the product.

Although some people think that this criticism is similar to the "want to prostitute an airdrop" mentality, critics emphasize that there is a fundamental difference between an IPO and an airdrop. They expressed their willingness to buy shares at the same price as everyone else, rather than seeking a free giveaway.

Regarding the claim that the IPO was oversubscribed by 25 times, leading to a general reduction in the allocation ratio, some industry insiders believe this is not entirely accurate. They point out that the transaction did not go smoothly in the early stages and only became extremely popular close to the end of the pricing period. The final "oversubscription" may just be a "masquerade" in terms of data.

Whether Circle's IPO allocation will affect its future and the adoption of USDC is still uncertain. The industry will closely monitor the upcoming 13F filings to understand which investors Circle ultimately chose to share in its growth dividends.