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Greetings! One of the longest running stories in crypto, Circle Internet Group's effort to go public, is finally wrapping up. After four years of trying, the stablecoin firm priced its initial public offering tonight at $31 per share, above its preliminary range of between $27 and $28, and valuing the company at $6.9 billion based on outstanding shares. Circle shares start trading on Thursday. It's the first big crypto company to go public since Coinbase listed in 2021. Stablecoins, for the uninitiated, are crypto tokens pegged 1:1 to U.S. dollars, backed by assets such as cash and U.S. Treasurys. They are mostly used by crypto traders to park their money on the blockchain and for cross-border payments. Circle is the second-largest issuer, with $61 billion outstanding of its USDC token. Circle's pitch to investors is that its stablecoin will be the go-to form of digital money in an internet-based financial system. Circle's IPO timing is both good and bad. The good news is that by going public now, Circle will benefit from the crypto-friendly policies of President Donald Trump and potentially from stablecoin legislation moving through Congress that would legitimize the tokens and pave the way for their use in payments and finance. The bad news? Circle will become a public company at a time when the field of stablecoins has suddenly become very crowded with more competitors lurking on the sidelines. Most obviously, Circle faces competition from Tether, the biggest stablecoin issuer with $154 billion outstanding, Paxos, another stablecoin issuer, and fintech and banks. Trump's family crypto project World Liberty also issued a stablecoin, called USD1, whose adoption was boosted by MGX, a Middle East sovereign wealth fund, which used the tokens to make a $2 billion investment into Binance. As shares start to trade, investors will be focusing on Circle's potential growth and the costs it will incur to get there. If history is a guide, those costs will include hefty payments to incentivize companies—from banks to fintech and payment firms—to use its stablecoin. Investors will be watching to see if Circle's USDC is adopted widely beyond crypto trading. Banks are increasingly looking to make use of stablecoins as a way to offer faster and cheaper payment settlement, and some banks could launch their own stablecoins rather than using Circle's USDC. Investors may also scrutinize Circle's fundamentals. In one sense, Circle appears to have a great business: It invests the money its customers use to buy its stablecoin in Treasurys and other safe assets, but it doesn't pay any interest on that money. Circle had $1.7 billion in revenue last year, nearly all in interest it earns from the cash and Treasurys that back up its stablecoin. But that revenue doesn't turn into much profit. Circle pays out about 60% of its revenue, mostly to Coinbase, its biggest distribution partner. Coinbase promotes Circle's USDC to its customers, including by paying them a yield that is currently 4.1%. Circle also shares revenue with Binance and others and expects distribution costs to increase, according to the filing. The result is Circle's profits were just $156 million in 2024. Circle's revenue is also highly sensitive to interest rates. If U.S. rates fall, Circle's revenue may decline significantly. The company argues that low rates spur demand for its stablecoins. It's also growing a fee-based business selling services. Circle's big investors are hedging their bets. Major venture backers Accel, General Catalyst, IDG Capital and Oak Investment Partners will be selling some shares in the offering. Offsetting some of that, Cathie Wood's Ark Investment Management has indicated interest to buy $150 million shares in the IPO. Well, look at that! Reddit is suing Anthropic for scraping its site for data to train its artificial intelligence models without authorization. Reddit is willing to do deals with AI firms—it has struck licensing agreements with both OpenAI and Google, for instance. But Anthropic, Reddit says in its lawsuit, "believes it is entitled to take whatever content it wants and use that content however it desires." This is the latest in a growing number of similar lawsuits, including one filed by The New York Times Co. against OpenAI. But what makes this one intriguing is that Reddit content comes from ordinary people posting comments and questions about all manner of subjects. Reddit says it has safeguarded that content: "It has never allowed its platform and the countless communities who find a home on it to be appropriated by commercial actors seeking to create billion-dollar enterprises and offering nothing in return to Reddit and its users." But you could say the same about Reddit itself, seeing as the company doesn't pay its users yet has built a business off their content—mostly by selling ads—that is now valued on the stock market at $22 billion. That being the case, we have to ask: What's the difference between what Reddit has done and what Anthropic is doing? A spokesperson for Reddit says the difference is that people join Reddit voluntarily and can delete their content whenever they want, or leave. And Reddit is willing to license the content so it can control who gets access and what they do with it. Those are fair points. Still, it's hard to avoid the feeling that the behavior of the two companies is more similar than Reddit cares to admit. —Martin Peers - Microsoft is reorganizing its top ranks of executives overseeing applications like Office 365 and Dynamics as the company prioritizes sales of AI agents, CEO Satya Nadella told staff on Wednesday.
- SpaceX is set to make about $15.5 billion this year, CEO Elon Musk said on his social media platform X, with about $1.1 billion of the private rocket company's revenue coming from NASA.
- XAI co-founder Christian Szegedy has joined Morph, a startup whose software aims to improve the quality of computer code generated by AI, as its chief scientist, a person with knowledge of the hire said. Szegedy appears to be the first of xAI's 12 cofounders to leave the company since it launched in March 2023 as a rival to OpenAI.
- A federal appeals court denied Apple's request for a stay of a court order that forced it to allow external payments inside apps for Apple devices like the iPhone. More here.
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