Stablecoins are no longer just a behind-the-scenes mechanism for crypto traders they’re becoming a mainstream investment theme. On June 10, Sigil Fund revealed the results of its early backing of Circle, the issuer of USD Coin (USDC), reporting a 4x return on its $5 billion pre-IPO investment made in July 2024.
Sigil was one of the earliest major financial firms to bet on the strategic importance of stablecoins, and the wager has paid off handsomely. Following Circle’s explosive IPO debut on June 4 where its shares began trading at $31 and soared to $115.25 within a week Sigil disclosed that the position boosted its net asset value by 9% on IPO day alone.
Why Circle?
Sigil Fund emphasized that Circle is currently the only viable public market investment offering direct exposure to the stablecoin sector. Unlike Tether, which remains a privately held company, Circle’s IPO opened up a new channel for institutional investors to participate in the stablecoin boom.
“Stablecoins are the silent backbone of crypto,” Sigil wrote in its investor communication. “They serve as the connective tissue between traditional finance and decentralized finance. Our belief in Circle reflects that vision.”
The fund also highlighted that even big tech companies are exploring stablecoin issuance, validating its long-term bet on the sector’s foundational role.
Circle’s Business Model and Growing Revenue
Circle generates revenue from the reserves backing USDC, which are held primarily in short-term U.S. Treasuries and repo agreements yield-generating instruments that make the stablecoin business highly profitable at scale.
As of June, Circle holds approximately $33 billion in reserves, broken down into:
- $11 billion in short-term Treasuries
- $16 billion in repo agreements
These reserves are forecasted to generate $1.46 billion in net revenue annually. As the USDC market cap expands, so too do Circle’s revenues and overall earnings potential.
A Gateway for Traditional Investors
Sigil Fund underscored that Circle’s listing represents a milestone for crypto equity markets, especially for those seeking regulated, stable returns in a volatile digital asset space. The investment firm believes Circle will serve as a benchmark for future crypto-fintech IPOs, much like Coinbase did for crypto exchanges.
While some analysts warn of overvaluation or potential pullbacks, Sigil remains confident that Circle’s core business backed by transparent reserves and a maturing regulatory environment will remain attractive in the long term.
Final Thoughts
With a 4x return already in the books and a bullish outlook on the stablecoin market, Sigil Fund’s early bet on Circle appears prescient. As more investors seek regulated on-ramps to crypto exposure, stablecoin infrastructure may no longer remain in the background. For now, Circle stands alone as the most accessible public gateway into that rising ecosystem.
