Background
I have worked in the crypto industry for many years - previously employed at early-stage fund CoinFund and Coinbase, helping them expand their venture investment strategies. All analyses in this article are based on public data, including Circle's S-1 filing (April 2025) and Coinbase's public financial documents. There is no internal information, just an analysis that anyone could perform, though most people have not done so.
USDC Supply Structure Analysis
Total USDC supply can be divided into three parts: Coinbase's USDC, Circle's USDC, and USDC from other platforms. According to Circle's S-1 filing definition, "Platform USDC" refers to the proportion of stablecoins held in custodial products or managed wallet services. Specifically:
· Coinbase: Including USDC held in Coinbase Prime and the exchange.
· Circle: Including USDC held in Circle Mint.
· Other Platforms: USDC held in decentralized platforms such as Uniswap, Morpho, Phantom, etc.
Coinbase's share of total USDC supply is rapidly growing, reaching approximately 23% in the first quarter of 2025. In contrast, Circle's share remains stable. This trend reflects Coinbase's stronger influence in consumer, developer, and institutional markets.
[The rest of the translation follows the same professional and accurate approach, maintaining the original structure and technical terminology.]The current market cap of USDC is around $60 billion, but it is expected to reach $50 billion in the future, with corresponding annual reserve income of about $20 billion. This will be a core driving factor for Coinbase to reach the "Mag7" level (global top tech company revenue level).
· Regulatory Factors
The United States is advancing stablecoin legislation (GENIUS legislation), which from a macro perspective is good news for the top-line growth of stablecoins, as it will deeply embed stablecoins into the existing US financial system. At the same time, stablecoins will become a proxy tool for global US dollar dominance.
However, this may also trigger traditional financial institutions (TradFi) and financial technology companies (FinTech) to enter the market as stablecoin issuers.
Additionally, related regulations may limit the marketing methods of platforms in yield or savings products. Acquiring Circle will give Coinbase the flexibility to adjust direction and marketing strategies to adapt to the changing regulatory environment.
· Operational Challenges
USDC was initially designed with a consortium model, which might have been based on legal and regulatory considerations at the time. Although these obstacles can be overcome under a single company framework, it is currently unclear where the specific red lines of these complex mechanisms lie. Deconstructing the existing legal structure may bring edge case risks, but currently, these risks do not seem insurmountable.
Price
Market results can never be accurately predicted, but we can refer to some disclosed data:
· Circle is seeking an IPO with a valuation of $5 billion.
· Ripple's IPO valuation target is $10 billion.
· Coinbase's current market cap is about $70 billion.
· USDC currently accounts for about 15% of Coinbase's revenue, and if fully integrated, this proportion could exceed 30%.
Personal Interpretation:
· Based on the above data, Circle is a natural acquisition target for Coinbase, and Coinbase is well aware of this.
· Circle hopes to have the market value it (targeting $5 billion) through an IPO.
· Coinbase wants to observe how the market prices Circle.
· Coinbase may have realized the following points:
· For the aforementioned reasons, Coinbase needs to fully control the full-stack business of USDC.
· Fully owning USDC can increase its annual revenue composition from the current 15% to between 15% and 30%.
· From a 1:1 revenue valuation, USDC ownership might be priced between $10 billion and $20 billion.
Circle may also be well aware of this - they know that if the market values them high enough and USDC continues to grow, Coinbase will be more motivated to directly acquire Circle to avoid various cumbersome issues with third-party partners in business, products, and governance, and integrate it into Coinbase's system.
Final Conclusion
Coinbase should and is likely to acquire Circle.
Although the current cooperation model works well, the conflicts in platforms, products, and governance are too significant to ignore in the long run. The market will price Circle, but both parties already have a clear understanding of each other's value.
