Circle’s expenses in its bid to go public threaten its position as the issuer of the second-largest stablecoin by market capitalization, according to Kevin Lehtiniitty, CEO of Borderless, in an interview with The Block.
The entrepreneur was involved in launching the “first fully reserve-backed” US coin, TrueUSD. His current firm provides infrastructure for financial institutions to integrate stablecoins.
In early April, Circle filed for an initial public offering (IPO) with the U.S. Securities and Exchange Commission. This move was part of previously announced plans to achieve public company status.
Lehtiniitty believes that the decline in USDC issuer’s profits in 2024 may reflect rising operational costs for regulatory compliance to gain approval.
The main competitor, Tether, which backs USDT, takes a different approach. Comparing staff numbers, it is evident that Circle spends “a lot of money” on licensing, compliance staff salaries, and lobbying, the expert noted.
In 2024, the company paid the crypto exchange Coinbase, a former partner in the Centre consortium, $908 million for USDC support. This deal represents Circle’s “distribution” expenses.
“This is the cost not even of the first position, but of holding the second. A good warning for those wishing to launch their own stablecoin,” Lehtiniitty emphasized.
He also sees no “unique advantages” for Circle in terms of coin distribution. Meanwhile, PayPal has significant advantages for PYUSD through integration into the payment giant’s existing products.
“World Liberty will have to prove it, but they probably have a completely unique privilege in promotion. I would suggest that the position of [U.S. President Donald Trump] gives you a certain priority,” Lehtiniitty said.
In March, a DeFi platform, over which the Trump family consolidated control, announced the launch of the USD1 stablecoin.
For Circle, Lehtiniitty sees the only way to maintain its position is to achieve the implementation of favorable regulatory policies that will outcompete rivals. This can be realized through lobbying, but such activities require “absolutely insane costs.”
Earlier, the relevant committee of the U.S. House of Representatives approved the framework bill STABLE Act on stablecoin regulation. A similar path was taken by the alternative document GENIUS Act in the Senate.