Circle Internet: Why The Genius Act Is Actually Bearish

Summary

• Circle's post-IPO surge is unwarranted; its revenue is almost entirely dependent on short-term interest rates, making it highly vulnerable to rate declines.
• The GENIUS Act, while providing regulatory clarity, locks Circle into a rate-sensitive reserve model, eliminating the ability to hedge with longer-duration assets.
• Circle's business lacks diversification and is not differentiated enough to justify its current valuation; a significant multiple contraction is likely.
• Given the Fed's clear path toward lower rates, Circle's earnings and stock price face substantial downside risk—this is a strong sell at current levels.

Gri-spb

Overview

Circle Internet Group (CRCL) surged past a $50b market cap shortly after IPO following the US Senate passage of the GENIUS Act, which provides long-awaited regulatory clarity for stablecoins. This euphoria is misplaced. Circle’s revenue is almost entirely driven by interest

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.