Bitwise analyst Tanner Rasmussen calls Circle “mispriced.” On the surface, it’s a bullish call on a stablecoin issuer that runs the second-largest dollar-pegged asset, USDC. But the statement is a Rorschach test for the market’s schizophrenia toward crypto infrastructure. Circle is not a protocol with a native token; it’s a private company that generates revenue from Treasury yields and transaction fees. Yet the market prices it like a cyclical tech startup, not a monetary utility. The gap between perception and reality is where the alpha—and the risk—lives.
Let’s start with the basics. Circle issues USDC, a fully reserved stablecoin backed by cash and short-term Treasuries, audited monthly. It operates under the New York Department of Financial Services (NYDFS) BitLicense, making it the most regulated stablecoin issuer in the U.S. It has filed an S-1 for a public listing, targeting a valuation between $5 billion and $8 billion in private markets. Meanwhile, the global stablecoin market has grown from around $130 billion in early 2024 to over $200 billion by mid-2025, driven by DeFi demand, cross-border payments, and RWA tokenization. USDC’s circulating supply has recovered from its post-SVB low of $24 billion to roughly $40 billion, but its market share relative to Tether’s USDT has stagnated at around 20–25%. Tether still commands 60–70% of the market, largely due to its liquidity depth and less stringent KYC requirements.
Rasmussen’s “mispriced” thesis hinges on two pillars: the expansion of the stablecoin market and the value of regulatory compliance. Yet the market seems to be pricing Circle as a high-beta crypto play, ignoring that its revenue stream is essentially a carry trade on U.S. Treasury yields. In 2023, when the Fed funds rate was above 5%, Circle likely earned hundreds of millions in interest income. But as rates decline, that revenue stream tightens—unless Circle diversifies into lending, payment processing, or RWA tokenization. The report I reviewed emphasized that diversified revenue “is key to future success,” which is a polite way of saying Circle is still too dependent on the interest rate cycle.
From my work on the CBDC prototype at the Los Angeles lab, I learned that the real value of a trusted digital dollar issuer lies not in its technology stack but in its ability to serve as a regulatory bridge. USDC’s smart contracts are audited and feature blacklist functions—a necessity for compliance but a single point of failure. The technology is mature but not innovative; the moat is regulatory, not cryptographic. This is exactly the kind of asset that traditional finance institutions value: a stable, transparent, and legally compliant dollar token. Yet the crypto-native market undervalues that because it prioritizes permissionless innovation over institutional safety.
Let’s break down the “mispricing” from a macro perspective. The 2017 ICO bubble was a dream of decentralized finance free from gatekeepers. Today, regulation is the gatekeeper, and Circle is the most privileged holder of the keys. “2017’s dream is today’s regulation,” as I’ve often said. The market fails to price this transition because it still applies the same valuation framework used for projects like Ethereum or Solana—where the token itself captures value through speculation. Circle’s value is captured at the corporate level, through equity, not through any token. The market is effectively pricing Circle’s stock as if it were a crypto token, with high volatility and cyclicality, but the underlying business model is closer to a payment processor like Visa or a money market fund.
Oracle feed latency is DeFi’s Achilles’ heel, but for stablecoins, the critical vulnerability is regulatory latency. The U.S. GENIUS Act or similar stablecoin legislation could grant qualified issuers like Circle a federal charter, effectively making them “narrow banks.” This would be a massive regulatory moat that Tether cannot replicate due to its opaque reserves and offshore structure. If that legislation passes, Circle’s license becomes a sovereign-grade asset, warranting a valuation multiple far above the current $5–8 billion range. But the legislative process is unpredictable; the bill could be delayed or diluted, leaving Circle’s advantage purely state-level (NYDFS) and vulnerable to jurisdictional competition.
Now the contrarian angle. Rasmussen’s call is optimistic, but it carries a hidden assumption that Circle’s regulatory advantage will materialize into a durable competitive edge. What if the market is already pricing that edge? Private market investors like Goldman Sachs and General Catalyst bought in at valuations that imply significant growth. A successful IPO could trigger a sell-off if the public market decides the regulatory premium is exhausted. Moreover, Tether is not sitting still; it is exploring compliance in the EU under MiCA and could launch a more transparent version of USDT. PayPal’s PYUSD is growing, and JPMorgan’s JPM Coin is targeting institutional payments. The stablecoin market is becoming a commodity space, where the only differentiator is trust—and trust is fragile. The 2023 SVB crash showed that even Circle’s USDC can lose its peg when confidence wavers. The mispricing may be real, but it is a binary bet on legislative timing and execution.
There are dozens of Layer2s now but the same small user base—this isn’t scaling, it’s slicing already-scarce liquidity into fragments. Similarly, the stablecoin market has multiple issuers, but the liquidity is concentrated in USDT. Circle’s growth depends on shifting that liquidity, which requires both regulatory tailwinds and user incentive. Without a clear catalyst—like a federal charter or a major exchange abandoning Tether—the market may continue to price Circle as a second-tier player.
What does this mean for the cycle? The market is in a bull phase, and euphoria often masks technical flaws. Circle’s “mispricing” is a classic case of narrative driving valuation disconnect. The bull market wants to believe in a compliant future, but it forgets that compliance is a cost center, not a profit center—until regulation creates scarcity. The real insight is not that Circle is undervalued, but that the market is pricing a regulatory fantasy without discounting the execution risk. If I were positioning for the next 12 months, I would watch the GENIUS Act vote count, not USDC’s on-chain volume. The mispricing will resolve when the legislation does—one way or the other.
Is the market pricing a regulatory fairy tale, or a new monetary infrastructure? The answer will emerge from the halls of Congress, not the code of the blockchain.