Circle Internet Group (NYSE:CRCL) Q4 2025 Earnings call February 25, 2026 08:00 AM ET Company ParticipantsDevin Ryan - Managing Director and Director of Financial Technology ResearchJeremy Allaire - Co-founder, CEO, and ChairmanJeremy Fox-Geen - CFOJohn Andrews - Vice President of Capital Markets and Investor RelationsJoseph Vafi - Managing DirectorPeter Christiansen - DirectorConference Call ParticipantsDan Dolev - Managing Director and Senior Fintech Equity Research AnalystJames Faucette - Managing Direct ...

Core Insights - Elemental Royalty has introduced a new dividend option for investors, allowing them to receive dividends in the form of Tether's XAUT, which represents tokenized gold, thereby providing direct ownership of physical gold through investments in gold royalties [1][2] - The company continues to offer traditional cash distributions, but the CEO emphasized that this innovative approach differentiates Elemental as a forward-thinking investment [2] - Elemental's stock price experienced a decline of 7.8% to $19.41 following the announcement, highlighting potential market reactions to the new dividend strategy [3] Financial Context - Tether's XAUT has seen significant growth, with its market capitalization increasing from $714 million to $2.5 billion, reflecting a 66% rise in gold prices over the past year [4] - Earlier this month, the total value of XAUT peaked at $3.5 billion, indicating strong market interest in tokenized gold as a financial asset [4] - Tether's gold holdings are estimated at 140 tons, valued at approximately $24 billion, which partially backs its USDT stablecoin [7] Industry Implications - The integration of tokenized gold into corporate finance, as demonstrated by Elemental, represents a significant advancement for the gold industry, suggesting new financial models that were previously unattainable [6] - Tether's efforts to promote tokenized gold as a medium of exchange, alongside traditional cryptocurrencies, indicate a broader trend towards the adoption of digital assets in various financial applications [5][6]

Group 1 - Tether is making a $150 million investment in Gold.com, Inc., which includes an initial purchase of approximately $125 million in common shares and an additional $25 million pending regulatory approval [2][3] - The partnership aims to create a vertically integrated gold ecosystem by combining Gold.com's gold infrastructure with Tether's stablecoin platform [3][6] - Tether currently holds close to 140 tons of gold, valued at over $23.3 billion, and issues Tether Gold, which has over 50% market share in the gold stablecoin sector [4][5] Group 2 - The investment is expected to enhance the credibility and distribution of Tether Gold (XAU₮) and expand Gold.com's retail and digital offerings [5] - Gold.com has a legacy of over 60 years and offers a direct-to-consumer marketplace along with various products, including JMBullion.com and GovMint.com [6] - Tether reported a net profit of $10 billion in 2025 and holds excess reserves of over $6.3 billion, with investments in diverse sectors including bitcoin mining and artificial intelligence [7]

Core Viewpoint - Tether has scaled back its plans to raise up to $20 billion in capital due to investor resistance regarding its proposed valuation, which would position the company among the world's most valuable private firms [1] Group 1: Fundraising Plans - Tether initially explored a funding round that could have valued the company at approximately $500 billion, with over $185 billion in USDT stablecoin circulation [1] - Advisers have suggested raising closer to $5 billion, significantly lower than earlier discussions, as investors questioned the deal's size and valuation [2] - CEO Paolo Ardoino clarified that the $15 billion to $20 billion range was a ceiling rather than a target, indicating that the company would be satisfied with raising no capital at all [2] Group 2: Profitability and Capital Needs - Tether is already highly profitable, generating around $10 billion in profit last year primarily from interest on assets backing USDT, and has limited operational need for external capital [2] - Insiders are reportedly reluctant to sell shares, further indicating the company's strong financial position [2] Group 3: Investor Concerns - Prospective investors have expressed concerns about a valuation that would place Tether alongside companies like SpaceX and ByteDance, citing regulatory risks and questions about reserve transparency [3] - Tether has faced scrutiny regarding the quality of its reserves and the use of USDT in illicit activities, with a lack of a full audit despite quarterly attestations from BDO Italia [4] Group 4: Market Position - Tether's increasing investments in U.S. Treasuries and gold have established it as a significant bridge between traditional finance and digital assets, attracting ongoing attention despite valuation debates [6]

Core Insights - Tether is becoming one of the largest private gold holders globally, accumulating approximately 140 metric tons of gold valued at an estimated $23 billion to $24 billion [1][2] - The company is shifting its reserves from short-term debt to hard assets, purchasing over 70 tons of gold in 2025 alone and adding one to two tons weekly [2][3] - This strategy positions Tether more like a global asset manager rather than a traditional crypto company, influencing global bullion flows and potentially supporting gold prices [3] Group 1 - Tether's gold holdings are stored in high-security vaults within a former nuclear bunker in the Swiss Alps [1] - The firm has reduced its commercial paper exposure by about $30 billion, replacing it with U.S. Treasury bills, holding roughly $98.5 billion in short-term U.S. debt by Q1 2025 [4] - Tether's USDT stablecoin continues to dominate the crypto market, making up about 60.4% of the total stablecoin market valued at around $307.9 billion [5] Group 2 - The steady accumulation of gold by Tether is significant enough to impact global gold flows and may provide support during market downturns [3] - Tether's strategy reflects a broader shift in its role within global markets, moving towards a more asset-backed approach [5] - The daily trading volume of USDT remains above $100 billion, maintaining its peg to the dollar [5]

Core Insights - Tether Holdings has become one of the largest private gold holders globally, with plans to prioritize gold over Bitcoin [2][3] Group 1: Gold Accumulation - Tether has accumulated approximately 140 tons of gold, valued at around $24 billion, stored in a high-security former nuclear bunker in Switzerland [2] - Over the past year, Tether purchased more than 70 tons of gold, acquiring one to two tons per week [2][4] Group 2: Funding and Strategy - The gold purchases are financed by profits from USDT, serving as reserves and backing for Tether's gold-backed token, XAUT [3] - Tether aims to actively trade bullion and has hired senior traders from HSBC to compete with major bullion banks [4] Group 3: Market Impact and Projections - Analysts note that Tether has contributed to gold's 65% rally in 2025, although it is not a dominant player [5] - Tether projects that the circulation of tokenized gold (XAUT) could reach between $5 billion and $10 billion, potentially serving as a gold-backed alternative to the U.S. dollar [6]

Core Insights - Tether Holdings has significantly increased its gold reserves, now holding approximately 140 tons, positioning itself as a major player in the gold market [1][3][6] - The company aims to compete with traditional banks in bullion trading, indicating a strategic shift towards becoming a key player in the gold sector [1][5] Group 1: Gold Accumulation - Tether purchased over 70 tons of gold in the past year for its reserves and its gold-backed stablecoin, XAUT, surpassing the holdings of the three largest exchange-traded funds [2] - The current value of Tether's gold reserves is estimated at $23 billion, making it the largest known treasury outside of central banks, ETFs, and private banks [3] - The company has been accumulating more than a ton of gold weekly and plans to continue this trend for the foreseeable future, assessing demand quarterly [3] Group 2: Storage and Security - Tether stores its gold in a former nuclear bunker in Switzerland, which is heavily secured, highlighting the company's commitment to the safety of its assets [4] Group 3: Market Position and Trading Intentions - Tether is looking to trade gold and compete with major financial institutions like JPMorgan Chase & Co. and HSBC, aiming for stable long-term access to gold [5] - Following the announcement of its gold holdings, Tether's gold-backed stablecoin, XAUT, experienced a price increase of 3.99% in 24 hours, with significant weekly and monthly gains [5]

Group 1: Karman Holdings Inc. (KRMN) - Karman had its IPO on February 13, 2025, at a price of $22 per share, and ended the year at just above $73, achieving over 230% return [3] - The company is a supplier of mission-critical components to nearly every prime defense contractor in the U.S. space and defense market, supporting high-growth areas like hypersonic missiles [4] - Karman's gross margin was 41% last quarter, ranking it among the top five mid-cap or larger U.S. aerospace and defense stocks, indicating strong pricing power [5] Group 2: Market Performance and Analyst Outlook - In 2025, over 200 companies had IPOs on U.S. exchanges, but less than a quarter outperformed the S&P 500's 18% return [2] - Karman, along with Circle Internet Group (CRCL) and HNGE, delivered impressive returns between 40% and over 200% [7] - The consensus price target for Karman is $80.43, implying around 5% upside, indicating continued analyst optimism despite significant prior gains [5]

Core Insights - The US Office of the Comptroller of the Currency (OCC) has approved five crypto companies, including Circle and Ripple, to establish national trust banks, marking a significant regulatory move to integrate crypto into the banking system [1][4][9] Group 1: Regulatory Developments - The approvals represent a proactive step by the Trump administration to incorporate cryptocurrency into the regulated banking framework [3] - The national trust bank charter allows these firms to custody assets and provide select banking services without accepting deposits or issuing loans [4] - The OCC has also permitted BitGo, Fidelity Digital Assets, and Paxos to convert existing state trust companies into federally chartered banks [5] Group 2: Operational Implications - The new charter enables firms to operate under a unified national standard, alleviating the challenges of navigating various state regulations [6] - Paxos is specifically authorized to issue stablecoins under federal oversight, while Ripple's charter prohibits the issuance of its US dollar-pegged RLUSD through the bank [6][9] Group 3: Industry Perspective - Crypto firms assert that a national trust bank charter enhances clarity and boosts client confidence, particularly in custody and settlement services [7] - The move is seen as a way for stablecoin issuers to gain credibility with corporate partners and differentiate themselves from less regulated competitors [7] - The OCC's actions are viewed as a means to ensure the federal banking system evolves alongside advancements in finance [7] Group 4: Market Context - The approvals come at a time when the crypto industry is striving for greater legitimacy in Washington, with several public listings anticipated in 2025 [8] - tZero Group, a blockchain infrastructure firm, has announced plans to go public in 2026, indicating growing interest in the sector [8]

Core Insights - Bybit and Circle have formed a strategic partnership to enhance USDC services across Bybit's platform, focusing on liquidity in spot and derivatives markets, and improving fiat-to-crypto on/off-ramps [1] - The partnership aims to facilitate easier access to USDC for both retail and institutional users, as stated by Circle's CEO Jeremy Allaire [2] Group 1: Partnership Details - The collaboration will enhance USDC liquidity and expand its integration into Bybit services such as Bybit Card, Bybit Earn, and Bybit Savings [1] - The partnership is timely as Circle reported a significant increase in USDC circulation, reaching $73.7 billion at the end of Q3 2025, a 108% year-over-year growth [2] Group 2: Financial Performance - Circle's total revenue and reserve income for the quarter was reported at $740 million, reflecting a 66% year-over-year increase, with adjusted EBITDA of $166 million, up 78% from the previous year [3] - Despite a downturn in the broader cryptocurrency market, stablecoin issuers like Circle continued to mint new coins, with approximately 20 million new coins backed by fiat reserves [3] Group 3: Market Context - The stablecoin market, including Circle, has shown resilience despite the overall market dip, although analysts have raised concerns about the long-term stability of the sector due to the underperformance of Bitcoin and Ethereum [4] - Recent downgrades of Tether's rating by S&P have sparked discussions about the stability of stablecoins, with Tether's CEO dismissing the rating as unfounded [4][5]