Weekly Market Highlights Review: The Resonance of Stablecoin U.S. Treasury and the Strategic Rise of Bitcoin in a New Cycle

This week, the cryptocurrency market is mainly characterized by ups and downs, with Bitcoin experiencing multiple spikes, while Ethereum remains relatively strong. Some related assets such as UNI and ETHFI have performed well. A certain media technology group has raised $2.5 billion in private equity financing to purchase Bitcoin, and Pakistan is establishing a national-level Bitcoin strategic reserve. A certain exchange's $5 billion repayment earlier this week stimulated the market positively. However, even on Friday, despite some positive news regarding the relaxation of regulatory oversight on staking, the favorable news turned into negative as the market still saw a general decline. Currently, the focus is on the subsequent market direction.

In terms of hot topics, stablecoins remain the main theme of the market and are gradually becoming one of the directions for the U.S. government and global institutions to布局; although the Bitcoin conference has not provided substantial benefits, mainstream opinions can be focused on; the relaxation of regulations, the staking track, and the timing of a certain trading platform entering the U.S. market have arrived.

1. The trend of stablecoins becoming U.S. Treasury-like

1.Circle IPO

On May 27, stablecoin issuer Circle clarified that it is initiating an Initial Public Offering (IPO) after rumors about a possible sale to a certain trading platform or cryptocurrency company. The company is moving forward with plans to list on the New York Stock Exchange. Two days later, a certain asset management company announced plans to subscribe to 10% of Circle's IPO.

Key details are as follows:

• IPO Date: The IPO is expected to begin trading on June 5, 2025.
• IPO Filing: Circle submitted its IPO application (S-1 filing) to the U.S. Securities and Exchange Commission (SEC) on April 1, 2025, and publicly released its prospectus on May 27.
• Stock code: The stock will be listed on the New York Stock Exchange (NYSE) with the code "CRCL".
• Stock Issuance: Circle plans to issue 24 million Class A common shares, with a price range of $24 to $26 per share. Of these, Circle will issue 9.6 million shares, and existing shareholders will issue 14.4 million shares. The underwriters have a 30-day option to purchase an additional 3.6 million shares to cover any over-allotments.
• Financing goal: The IPO is expected to raise approximately $624 million, with a valuation of about $5.65 billion. Considering options and other shares, the fully diluted valuation could reach $6.71 billion.
• Investor Interest: Well-known investors, such as a certain investment management company, have expressed interest in purchasing up to $150 million in shares.

Circle's USDC stablecoin currently has a market capitalization of approximately $60.793 billion, accounting for 24.59% of the total stablecoin market capitalization, second only to a certain stablecoin's 62.12%. Since the beginning of this year, USDC's market capitalization has grown by 38.44%, while a certain stablecoin has only grown by 11.51%.

To understand why Circle is so committed to an IPO (Circle intended to go public via SPAC in 2021, but the process was terminated in 2022 due to SEC review), it is closely related to its partner trading platform.

• Successful precedent: A certain trading platform went public on NASDAQ in April 2021, becoming the first listed major cryptocurrency exchange in the United States, with a valuation that once reached 85 billion dollars.
• Market recognition: The listing on a certain trading platform has attracted institutional investors and enhanced the legitimacy of the crypto industry. Circle's IPO has similarly attracted investors from a certain asset management company. ** Certain investment companies and certain asset management companies participated in the listing on a certain trading platform and also appeared on the potential investor list for Circle's IPO. **
• Operational model reference: A certain trading platform has achieved financial stability through diversified income sources. Circle has drawn on a similar model, relying on interest income from USDC and transaction fees to provide a solid financial foundation for its IPO.

A certain trading platform has signed a 50% revenue sharing agreement with the issuer Circle, and receives 100% of the earnings from the interest generated by the USDC product on that platform. For this trading platform, USDC has become the second largest revenue driver after trading. In 2024, the trading platform received approximately $900 million in USDC revenue from Circle, with almost no operating costs, accounting for about 25% of its total valuation, highlighting the importance of USDC to the platform's finances.

With the relaxed regulations of the Genius Act after the IPO, Circle not only can more easily access capital from the markets for innovation, research and development, and global expansion, but also attract more strategic investors or partners to further extend its business scope, such as collaborations with traditional banks or international regulatory agencies. Moreover, the growth of USDC directly benefits the platform revenue of certain trading platforms and related public chain ecosystems, which may drive up the platform's stock price.

2. A stablecoin shifts to emerging markets

On May 25, according to a certain media report, a CEO of a stablecoin stated that despite the United States advancing stablecoin legislation, the focus of the stablecoin will still be on overseas markets, and they are paying attention to the impact of the "Genius Act" on foreign issuers. Part of the reason is that their Bitcoin and other assets such as mortgages may not meet the proposed standards.

The chart below shows the collateral composition of the four major stablecoin issuers. Certain stablecoin, certain stablecoin, and USDCoin (USDC) have shifted their collateral from U.S. Treasury bonds to reverse repurchase agreements and cash; the collateral for certain stablecoin (USDT) has shifted from credit-risky assets (such as commercial paper and certificates of deposit) to U.S. Treasury bonds. Nonetheless, it has been reported that by December 2024, the largest stablecoin issuer, certain stablecoin, will still have 18% of its reserves invested in lower liquidity and higher risk assets, such as other non-stablecoin crypto assets and loans. (The requirement of 100% reserves mandated by the GENIUS Act needs to be comprised of high liquidity, low-risk assets (such as cash, U.S. Treasury bonds, and reverse repurchase agreements) is not entirely met.)

3. The Close Connection Between Stablecoins and U.S. Treasury Bonds

The business model of stablecoins is extremely advantageous for issuers. Stablecoins are typically backed by cash and highly liquid assets (such as short-term U.S. Treasury bills) at a 1:1 ratio. Unlike banks or money market funds, issuers do not distribute the interest income from the reserve assets to holders, but instead keep the earnings for themselves, thereby obtaining substantial profits when the interest rate environment and market demand are favorable.

The business models of stablecoin issuers are affecting the global macro economy by increasing the structural demand for U.S. Treasuries. The holdings of U.S. Treasuries by two major issuers, certain stablecoins and Circle, have reached as high as $116 billion, placing stablecoin companies among the top 20 direct holders of U.S. Treasuries, surpassing sovereign nations such as Germany and Mexico.

With the impending passage of the U.S. Genius stablecoin bill, more and more stablecoin issuers will become channels for the digital dollar to enter the global economy, thereby enhancing the global accessibility of the dollar and expanding the reach of U.S. monetary policy.

In addition, the U.S. government has made it clear that it will use stablecoins to maintain the global reserve currency status of the U.S. dollar. The Secretary of the Treasury stated at the White House Cryptocurrency Summit: "We will maintain the U.S. dollar as the world's primary reserve currency and will use stablecoins to achieve this goal."

Stablecoins and U.S. Treasury bonds have similarities in economic functions:

• Security and Stability: U.S. Treasury bonds are considered the safest assets, and stablecoins ensure their value stability by holding Treasury bonds. The total market capitalization of the stablecoin market has reached $247.252 billion, most of which is composed of stablecoins backed by financial assets such as Treasury bonds.
• Liquidity: Both are highly liquid, but stablecoins mainly circulate in the crypto market, while government bonds circulate in traditional financial markets.
• As collateral: U.S. Treasury bonds are commonly used as collateral in traditional finance, and stablecoins are increasingly being used as collateral in DeFi (decentralized finance).
• Source of Income: Stablecoin issuers earn interest income by holding government bonds, which is similar to the operation of the government bond market. The profits of a certain stablecoin come directly from the yield of the government bonds in its reserves, while Circle's revenue in 2024 reached $1.68 billion, which also mainly comes from government bond interest.

2. Bitcoin Conference

1. Vice President Vance

• Policy Shift

Vans announced that the government has ended the hostile policies of the previous administration and cleared the previous regulatory obstacles. He promised to establish a national Bitcoin reserve within 100 days to compete for global leadership. In addition, he pushed for the legislation of the GENIUS Act to establish a regulatory framework for USD stablecoins, aiming to make stablecoins the new engine of the dollar economy.

• The Strategic Role of Bitcoin

Wans pointed out that 50 million Americans hold Bitcoin, with a goal of increasing to 100 million. He emphasized that Bitcoin is a tool to combat inflation, policy risks, and financial censorship, particularly mentioning its potential as a strategic asset, especially in contrast to China's unsupportive stance.

• Regulation and Innovation

The speech mentioned that transparent and innovative regulations for digital assets will be formulated and integrated into the mainstream economic system. Vance criticized the regulatory approach of the former SEC chairman and pledged to continue eliminating regulators that hinder innovation.

• Community Engagement and Future Outlook

Wans calls on the crypto community to continue participating in politics, especially in the 2026 midterm elections, to promote favorable policies. He also mentioned the synergy between AI and crypto, emphasizing the need to focus on AI development to protect national interests.

2. U.S. Senator Cynthia Lummis

• The Importance of Market Structure Legislation

Lummis discussed the market structure bill with the chief legal officer of a trading platform. She pointed out, "The market structure bill is particularly important for businesses engaged in purchasing and holding Bitcoin, as many operations involve custody services, or companies lending Bitcoin, as well as the Bitcoin futures market, with various ways to interface Bitcoin with the US dollar." She emphasized that this has a greater direct impact on the industry than the stablecoin bill.

• stablecoin bill

The GENIUS stablecoin bill has entered the final review stage in the Senate. The bill broke through the 60-vote procedural threshold last week, despite opposition from leaders of a certain party. If passed, it will be the first successful legislation from the Banking Committee in eight years. Lummis hopes to use this to promote broader regulatory legislation for the crypto market.

• Future Tax System

Lummis proposed tax reform, specifically to exempt Bitcoin transactions under $600 from taxes. She mentioned, "The future tax system should exempt Bitcoin transactions under $600 from taxes, like buying coffee or dinner," and associated it with technologies such as the Lightning Network and certain payment companies. She has submitted the proposal to the Finance Committee, aiming to reduce the tax burden on small transactions.

• Bitcoin Strategic Reserve

She suggested that the United States buy and hold 1 million Bitcoins, which could halve the U.S. $37 trillion national debt in 20 years. She explained, "By purchasing Bitcoin as a strategic reserve, we can leverage inefficient assets without additional borrowing, which would significantly improve our fiscal situation." This proposal sparked widespread discussion at the conference, particularly concerning national debt and fiscal sustainability.

• Regulatory Challenges

Lummis pointed out that over the past four years, regulators have taken a hostile stance towards digital assets, which has hindered policy advancement. She mentioned, "The absence of a confirmed IRS head has delayed the legislative process related to this," emphasizing the need for a clearer regulatory framework.

• The Global Strategic Significance of Bitcoin

She emphasized that Bitcoin is crucial for the economy and global defense, describing it as "a deterrent against aggression, particularly the threat from China." She mentioned that "military leaders also support this view," which further reinforces Bitcoin's position as a strategic asset.

3. SEC Commissioner Hester Peirce

According to reports from certain media, SEC Commissioner Hester Peirce stated during her speech at the Bitcoin 2025 conference, "I believe that Meme coins are more like collectibles, and participants in Meme coins do not receive the protection of securities laws. I think we..."