This week marks a major milestone for the Boston cryptocurrency scene: a crypto company founded here, Circle Internet, will start trading on the New York Stock Exchange.

The company was hatched in 2013 in the Harvard Square offices of General Catalyst, a venture capital firm, and it now manages a widely used “digital dollar” called USDC. Cryptocurrency users had put more than $60 billion into Circle’s USDC currency, as of last month.

Demand seems strong for Circle’s stock. On Monday, the company expanded the number of shares it will offer to public market investors. And the Trump administration has been signaling its support for the cryptocurrency industry, loosening regulatory oversight and dropping lawsuits against crypto companies such as Coinbase and Gemini.

When it starts trading, Circle could be worth more than $7 billion. The initial public offering will also be a win for General Catalyst, the Cambridge firm that was among Circle’s first investors; it still owns more than 12% of the company.

But what exactly does Circle do, and why did it decide to move its headquarters from downtown Boston to lower Manhattan late last year? Here are six things to understand about Circle, based on interviews with crypto experts who are not connected with the company.

Circle’s business

Circle manages a kind of “digital dollar,” USDC, that is also known as a stablecoin. What’s stable about it? Ideally, it maintains a one-to-one relationship with actual U.S. dollars, so that a buck put into USDC will be worth a buck when taken out. Unlike cryptocurrencies like Bitcoin or Ethereum, stablecoins are designed to hold a constant value, and they are backed by conservative assets such as U.S. Treasury-issued securities or cash held in a U.S. bank.

Drew Volpe, founder of Cambridge-based First Star Ventures, an investment firm, said Circle’s business is simple: “They’ve got sixty billion or so in those dollars. They put them in short-term Treasuries …and they collect the interest.” So while you get your USDC turned back into a U.S. dollar whenever you want, Circle has collected interest on it for whatever period it was held in USDC.

USDC is primarily used for two things: accessing U.S. dollars in places where the banking system is unreliable, and enabling fast, low-cost digital payments. As Matt Walsh, a founder of the Boston investment firm Castle Island Ventures, explains, it is used by “people who want access to U.S. dollars that otherwise would have a difficult time getting access to dollars, particularly internationally.”

For example, someone in a country like Argentina or Venezuela worried about currency devaluation might buy USDC through a local cryptocurrency exchange to preserve their income or savings in dollars.

Another important use is payments, particularly international remittances.

“With stablecoins, you just send $1 peer to peer in a millisecond,” Walsh says. This can simplify and cut the costs of international money transfers, compared to traditional money movement systems such ACH or SWIFT.

Circle moved its headquarters from Boston to New York last year

Although Circle was founded in Cambridge, and multiple sources say CEO Jeremy Allaire still resides in the area, the company announced that it would move its headquarters from Boston’s Financial District to Manhattan in early 2025.

Circle leased the entire 87th floor at One World Trade Center, a skyscraper built next to the site of the twin towers. In a press release issued last September, Allaire said the company was “privileged to join New York’s thriving community of innovators, technologists and financial leaders.” However, the company, with nearly 1,000 employees, said that it has a “remote-first” culture, and that the new office would be primarily a “convening space” for meetings, as opposed to requiring employees to show up five days a week there.

Walsh noted that “New York is clearly the leader [in cryptocurrency] …as opposed to in Boston, where we have the foremost antagonist to this technology, [U.S. Senator] Elizabeth Warren.”

Volpe echoed that the move aligned with New York becoming a hub for regulated crypto activity.

Joshua Deems, a Boston-based executive at Figment, a provider of blockchain infrastructure, called Circle “a pretty distributed company,” suggesting the new HQ in New York is symbolic as much as strategic.

Among Circle’s top executives, a handful like Allaire, Senior Vice President of Engineering Michael Tsui, Chief Business Officer Kash Razzaghi and Chief Strategic Engagement Officer Elisabeth Carpenter still list Boston as their location on LinkedIn. But other top Circle leaders are based in Washington, D.C., San Francisco, New York, and Chicago, according to LinkedIn.

Circle is a case study in how tough it is these days to say exactly where a company is “based,” and Circle, like most companies, doesn’t provide a breakdown of where its employees are located.

The business is dependent on interest rates — and there are other risks

Since Circle’s core business is capturing the spread between what its assets (mostly Treasuries) earn and the $1 it returns to holders when USDC is redeemed, “When interest rates are up, their revenues are up,” according to Carlos Mercado, a senior data scientist at the Boston analytics firm Flipside Crypto, which focuses on digital assets and the underlying blockchain technology. However, this also means Circle’s financial performance will fluctuate based on the macroeconomic environment — like President Trump’s current push for lower interest rates.

While USDC is backed by real assets, it is not insured like bank deposits. Deems said that USDC is also vulnerable to “a de-peg,” where the token could potentially trade below $1. Mercado recounted a real example: “USDC was not trading at $1 in March of 2023″… It was trading at 92 cents, 89 cents.”

That occurred the weekend after a run on Silicon Valley Bank, which had custody of roughly 8% of Circle’s assets. That event briefly shook USDC holders’ confidence in the token’s value. But Mercado said that Circle now uses more diversified and secure banking partners — banks generally considered “too big to fail” by the U.S. government.

The company’s IPO filing lists twenty risks the business could face, including that Circle is “subject to an extensive and highly evolving regulatory landscape,” and that “our products and services may be exploited by our customers, employees, service providers, and other third parties to facilitate illegal activity.”

Circle’s biggest competitor is Tether, and new players could enter the market

Another stablecoin, Tether (known as USDT), remains the global leader in stablecoin circulation, with about $150 billion in value. Tether has “some first-mover advantage” in regions like Africa, Walsh said. The company recently moved its headquarters from the U.S. Virgin Islands to El Salvador.

It “was kind of like the cowboy, Wild West stablecoin,” Volpe said. And Mercado noted that Tether backs its stablecoin with some amount of Bitcoin, which is subject to fluctuations.

More concerning for investors in Circle’s stock, Volpe said, is Circle’s reliance on distribution partners like Coinbase, a big San Francisco-based cryptocurrency exchange.

Coinbase keeps “100% of the [interest] revenue from USDC kept on [its] exchange, and even 50% of revenue from USDC held on other platforms,” raising questions about Circle’s margins and control of its own ecosystem, Volpe explained.

Other companies, like PayPal, have already launched their own stablecoins, and traditional players in the payment industry such as Visa and Mastercard could follow suit at some point, he said.

Circle is becoming a symbol of U.S.-aligned, regulated crypto

The experts with whom I spoke consistently described Circle as the “buttoned-down” alternative to more freewheeling, offshore crypto firms.

“Jeremy [Allaire] and the Circle team have really embraced … trying to be open, trying to work with regulators,” Volpe said.

Walsh argued that stablecoins are “really important to the future of the dollar,” and Allaire has been a consistent advocate for creating a comprehensive federal framework for stablecoin regulation.

In his June 13, 2023, testimony before the House Financial Services Committee, Allaire said, “As a nation, we need to ensure that the dollar is the most competitive currency on the internet, and that there can be universal access to the safest and most secure digital dollars possible. The stakes are simply too high to ignore.”

Despite common perceptions about cryptocurrencies being used for black market transactions, USDC is probably more traceable than paper money. While there are concerns about digital currencies’ usefulness for money laundering, or funding terrorism or other criminal activities, as Deems puts it, “criminals who use blockchains to launder money are probably the dumbest criminals out there,” because “every transaction is fully traceable.”

Platforms like Coinbase require users to undergo so-called Know Your Customer (KYC) checks — providing ID and social security numbers — before they can acquire USDC, and blockchain records allow law enforcement to trace the full history of every token. By contrast, cash is holding onto its reputation as “the best way to launder money,” in Deems’ words.

Will Circle as a stock be a better investment than cash or a USDC coin? We’ll soon find out...