Circle is Undervalued: Valuation Still Seen at $7.5 Billion Despite Bill Pressure

Author: Matt Hougan, Bitwise

Compiled by: AididiaoJP, Foresight News

Even considering recent concerns sparked by the “CLARITY Act,” my conservative estimates suggest that by 2030, Circle’s valuation could reach $75 billion.

One of the most common questions we receive is: “How to invest in stablecoins?”

Typically, we recommend focusing on crypto assets that support the stablecoin ecosystem, such as Ethereum, Solana, and Chainlink, or on crypto companies operating in this space, like Circle and Coinbase. Since it’s difficult to predict who will benefit most from the rise of stablecoins, some believe investing across the entire sector is a reasonable approach.

However, among the many options, one opportunity stands out: Circle—the issuer of USDC, the world’s second-largest stablecoin. It is the only company that is publicly listed and solely focused on stablecoins. In my view, this makes it the most straightforward choice.

So, is Circle a worthwhile investment?

Today is a good day to answer that question, especially since the stock recently dropped sharply (20% on Tuesday) due to news that the latest draft of the “CLARITY Act” imposes restrictions on platforms paying interest income to stablecoin users. I believe the market’s reaction was somewhat excessive.

To illustrate this, it’s necessary to examine Circle’s future from a macro perspective.

Three Key Questions Determining Circle’s Future

1. How large will the stablecoin market become?

The first question concerns the potential growth of the stablecoin market. Various forecasts exist, with the most widely cited being a report from Citigroup. The “base case” predicts that by 2030, the assets under management in stablecoins will reach $1.9 trillion; in a “bull case,” up to $4 trillion.

The news about the “CLARITY Act” has not changed these baseline forecasts. So far, interest income has not been a primary driver of stablecoin growth; most stablecoins currently do not generate interest for holders. The popularity of stablecoins lies in their ability to facilitate efficient, reliable global fund transfers, suitable for trade settlement, collateralized lending, and as alternatives to unstable fiat currencies.

Convenience is the core value proposition of money, and that’s where stablecoins excel. Currently, the average savings account interest rate in the U.S. is about 0.60%, and the average checking account yields around 0.07%. People keep funds in these accounts not for earning interest but for liquidity and convenience. As the global financial system continues to migrate toward blockchain-based infrastructure, I expect stablecoins will play an increasingly important role, regardless of whether they pay interest.

In my view, Citigroup’s baseline forecast is actually quite conservative. Nonetheless, to maintain a conservative approach, we will use the $1.9 trillion figure as the basis for subsequent estimates.

2. What market share will USDC hold?

Currently, Circle’s USDC accounts for about 25% of the total stablecoin market, behind Tether’s USDT.

(Why not invest in Tether? Because Tether is a private company and not publicly investable.)

Stablecoin Market Capitalization Distribution

Source: Bitwise Asset Management, data from The Block. Data coverage: Jan 1, 2020 – Mar 23, 2026. Note: “Others” include BUSD, crvUSD, DAI, FDUSD, FEI, FRAX, GHO, GUSD, LUSD, MIM, PYUSD, TUSD, USDD, USDe, USDP, and USDS.

A common view is that as large institutions like US banks, Stripe, and Wells Fargo enter the stablecoin space, Circle’s market share will gradually decline.

I remain skeptical. Historical experience shows that innovative companies often defend their early market positions well.

For example:

• In 1976, the world’s first index fund was launched by an obscure firm called Vanguard. Today, Vanguard is a leader in passive asset management globally.
• In 1993, the first ETF, SPY, was launched by State Street. At that time, State Street was not yet a giant in asset management. SPY remains the most traded ETF worldwide, with over $650 billion in assets.
• In 1996, the first series of international ETFs was launched by an unknown asset manager called Barclays Global Investors. It was later acquired by BlackRock for $12 billion, and its iShares brand now manages $5 trillion.

We are beginning to see early signs of Circle resisting competition from well-known firms: in 2023, PayPal launched its stablecoin PYUSD, but the market response was lukewarm, with PYUSD’s market share just over 1%.

Of course, there are cases where large firms eventually overtake early movers. For example, in the money market fund sector, Fidelity, Vanguard, and Federated Hermes quickly gained significant market share from the original innovator, Reserve Fund Group. This is noteworthy because money market funds and stablecoins share similarities: both attract USD funds and invest in short-term, high-quality securities like U.S. Treasuries.

Nevertheless, I do not believe large banks can easily crush Circle. I think Circle’s market share could also expand. Although Circle currently holds about 25% of the overall stablecoin market, its share in the regulated segment is likely much higher (Tether’s USDT mainly dominates offshore markets). While exact data on Circle’s share in the regulated market is hard to obtain, I estimate it exceeds 80%. If growth in stablecoin assets mainly occurs in the regulated segment—since banks, fintechs, and large corporations prefer onshore, regulated stablecoins—Circle’s market share could significantly surpass its current 25%.

However, for the sake of a conservative analysis, I will assume Circle maintains its 25% market share in the future.

3. What will be Circle’s profit margin?

The most complex and critical question: how much revenue can Circle generate from its deposit assets?

Currently, Circle earns all interest income from U.S. Treasuries backing USDC. At current rates, this means its $80 billion in assets under management can generate about 4% annually.

But this figure doesn’t fully reflect Circle’s actual income potential, as it must also consider the distribution costs paid to acquire these assets. For example, USDC was developed jointly with Coinbase and is the exchange’s flagship stablecoin. According to the agreement, Circle pays Coinbase all interest income generated from USDC held on its platform, which Coinbase then largely passes on to users. Circle also has distribution agreements with other exchanges. The rationale is that paying fees to some distribution channels can create a positive feedback loop—attracting assets directly, allowing Circle to earn higher proportions of revenue or monetize assets through other means in the future.

Overall, Circle currently pays about 60% of its revenue to distribution partners. This means its effective “net” rate is roughly 1.6% under current interest rates.

Is this sustainable? Two main factors need to be considered:

First, interest rates. Circle’s interest income is directly linked to market benchmark rates. Fed rate hikes benefit Circle; rate cuts hurt.

Second, the competitive landscape. Imagine a market with hundreds of stablecoins, where users can freely switch among USDC, WFUSD, BAUSD, PYUSD, and others. In such a scenario, Circle’s ability to maintain its interest income would be limited by competition, which tends to compress profit margins.

However, I remain skeptical. In a perfectly efficient market, this would be true, but in reality, it often isn’t. Charles Schwab earns billions annually from the spread between the interest it pays depositors and what it earns from those deposits, despite customers easily switching to higher-yield alternatives. Customers don’t always act because their value proposition isn’t solely about yield—it’s about convenience, trust, and integration. USDC shares these qualities: users hold USDC mainly for its broad utility and credibility, not for interest. This user stickiness is unlikely to disappear in the short term.

I also want to point out that the current draft of the “CLARITY Act” could actually have a positive impact on Circle’s profit margins, as it increases the difficulty of paying interest to stablecoin holders.

Overall, I believe that as competition intensifies, Circle will face greater pressure on its profit margins. The company may even need to adjust its revenue model, which is something Circle is actively working on. For this analysis, I will assume its interest rate drops by half, to 0.8%.

Conclusion

Answering these three questions doesn’t fully capture Circle’s entire business. As mentioned earlier, Circle has launched its own blockchain and continues to innovate in payment technology, with non-interest income growing rapidly. But I believe that examining the company through these three questions allows for an effective 80/20 analysis of its stock value.

Based on these conservative assumptions—$1.9 trillion market size, 25% market share, and 0.8% profit margin—we arrive at an annual revenue of $38 billion before distribution costs and other expenses. Currently, the company’s operating costs are relatively low, at about $144 million in 2025. Even if these costs double or triple by 2030, after taxes, there would still be approximately $2.7 billion in net profit. Using the current S&P 500 average P/E ratio of 28, Circle would be valued at $75 billion.

This figure is roughly double the company’s current valuation. It’s a decent performance, but given market volatility, whether it’s worth investing warrants further consideration.

It’s important to note that every assumption in this analysis has been conservative. If stablecoin growth reaches Citigroup’s bullish scenario, or if Circle’s market share increases (as recent performance suggests), or if the company maintains current interest rates or develops new revenue streams, the valuation could be significantly higher.

Overall, I can envision Circle’s value in 2030 being far above my rough estimate, or possibly below it. I believe the value of this analysis lies in showing that Circle’s current valuation is within a reasonable range. If stablecoin development aligns with market expectations, even with conservative assumptions, Circle remains an attractive investment opportunity.