SecProbe.io

United States securities and exchange commission logo
February 27, 2024
Jeremy Allaire
Chairman and Chief Executive Officer
Circle Internet Financial Limited
99 High Street, Suite 1701
Boston, MA 02110
Re:Circle Internet Financial Limited
Draft Registration Statement on Form S-1
Submitted December 13, 2023
CIK No. 0001876042
Dear Jeremy Allaire:
            We have reviewed your draft registration statement and have the following comments.
            Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or publicly filing your registration statement on
EDGAR. If you do not believe a comment applies to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.
            After reviewing the information you provide in response to this letter and your amended
draft registration statement or filed registration statement, we may have additional comments.
Draft Registration Statement on Form S-1
General
1.Please provide us with your legal analysis as to whether either USDC or EURC is a
"security" within the meaning of Section 2(a)(1) of the Securities Act.
2.Please provide a detailed legal analysis regarding whether the Company and its
subsidiaries are or hold themselves out as being engaged primarily in the business of
investing or trading in securities, as described in Section 3(a)(1)(A) of the Investment
Company Act of 1940 (“Investment Company Act”). In your response, please (i) discuss
the Company’s investments in securities as reflected on the company’s balance sheet,
including any securities recorded as “cash equivalents,” (ii) discuss the Company’s
business of holding and trading stablecoins, including an analysis of their status as
investment securities, and (iii) address, in detail, each of the factors outlined in Tonapah
Mining Company of Nevada, 26 SEC 426 (1947).

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 Comapany NameCircle Internet Financial Limited
 February 27, 2024 Page 2
 FirstName LastNameJeremy Allaire
Circle Internet Financial Limited
February 27, 2024
Page 2
3.Please provide a detailed legal analysis regarding whether the Company or any of its
subsidiaries meet the definition of an “investment company” under Section 3(a)(1)(C) of
the Investment Company Act. In your response, please include all relevant calculations
under Section 3(a)(1)(C), identifying each constituent part of the numerators and
denominators, with values as of your most recent fiscal quarter ended. Please also (i)
specifically describe the types of assets recorded as “cash equivalents” on your balance
sheet, (ii) specifically describe the assets included within “assets related to safeguarding
obligations” on your balance sheet, if any, and (iii) describe and discuss these assets’
proposed treatment for purposes of section 3(a)(1)(C), as well as any other substantive
determinations and/or characterizations of assets that are material to your calculations.
4.Please provide the source for any market and industry data included in your disclosure.
As examples only, we note the following disclosures:
•Your statements on page 12 that "[a]s of August 2022, the market capitalization of all
tracked digital assets was $1.1 trillion" and your "market opportunity encompass[es]
more than $2.2 trillion in global consumer payments revenue forecasted by 2027."
•Your statement on page 109 that "[i]n 2020, financial services contributed
approximately $1.4 trillion to the gross domestic product of the United States,
representing approximately 8% of U.S. GDP."
5.Please define at the place of first usage all acronyms, abbreviations or industry terms, such
as "EFFR" on page 78 and "SMTP" and "SSL" on page 123, and clearly explain their
meanings so that a reader without specialized industry knowledge can understand them.
6.We note your disclosure on page 33 that you depend on third-party partners and payment
systems. Under an appropriately captioned heading, please identify the third-party
partners and payment systems on which you are materially dependent upon, and specify
the purpose of your relationship with each party identified. Please also file your material
agreements with third-party partners and payment systems as exhibits or tell us why you
are not required to do so. Please refer to Item 601(b)(10) of Regulation S-K.
7.Please revise your disclosure to describe any material arrangements or agreements,
including any distribution or revenue sharing agreements, between the Company and any
crypto asset exchanges or other parties. In this regard, please describe any revenue sharing
agreements the Company currently has or previously has had. With respect to any current
or prior revenue sharing agreement, please revise your disclosure to clarify the following:
•provide the details of those arrangements, including identification of the other
party(ies), key terms and conditions;
•revise to disclose the material rights and obligations of the parties to any such
agreements, including the goods and services promised by the parties to the
agreement; and
•with respect to the calculation of the revenue sharing allocation, specifying the
percentage allocated during each period presented.
8.Please tell us, and revise your disclosure to discuss, how you expect your reserve assets

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 Comapany NameCircle Internet Financial Limited
 February 27, 2024 Page 3
 FirstName LastNameJeremy Allaire
Circle Internet Financial Limited
February 27, 2024
Page 3
would be treated in the event of bankruptcy.
9.Please supplementally provide us with copies of all written communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do so on your behalf,
present to potential investors in reliance on Section 5(d) of the Securities Act, whether or
not they retain copies of the communications. Please contact the staff member associated
with the review of this submission to discuss how to submit the materials, if any, to us for
our review.
Founder's letter, page 1
10.We refer to the letter from your founder. Please revise the letter and your Summary
section to ensure that it is a balanced presentation of your business and offering. In this
regard, we note that the letter includes performance claims concerning your growth rate
but it does not equally address the risks or challenges you face. In addition, please
substantiate the following statements in the letter or remove them from your disclosure:
•your "open, honest and transparent approach has been essential in helping
governments understand new and complex technologies;"
•your investment in compliance has been "pivotal in building trust with banks and
regulators;"
•regarding your statement that "partnering with governments will be essential to
building an internet financial system," please disclose what you mean by "partnering
with governments" and specify any governments with which you have entered into
partnerships;
•you have "supported approximately $12.4 trillion in on-chain transactions" as of
September 30, 2023; and
•you are building a "highly regulated" set of financial market infrastructures and
holding yourself to "the same enterprise risk and compliance standards of leading
international banks."
Prospectus summary, page 6
11.Please revise your summary to provide a brief overview of the key aspects of the offering,
using clear and plain language. In that regard, please revise to provide the reader with a
clear and concise understanding of the current state of your business and industry. Please
avoid using unnecessary jargon or marketing language. Please also ensure that your
presentation is balanced and does not overly emphasize your plans for growth or
expansion or expectations regarding future industry developments.
Circle's stablecoin network in the new internet financial system, page 7
12.You define payment stablecoins as “digital bearer instruments issued by regulated entities
that represent and entitle a holder to redeem a unit of fiat currency at par.” Please explain
the applicability of this definition to your payment stablecoins in light of the fact that not
all holders of your stablecoins are able to redeem in exchange for reserve assets.

 FirstName LastNameJeremy Allaire
 Comapany NameCircle Internet Financial Limited
 February 27, 2024 Page 4
 FirstName LastName
Jeremy Allaire
Circle Internet Financial Limited
February 27, 2024
Page 4
13.We note your disclosure on page 8 that you "ensure readily available access to [y]our
stablecoins around the globe with deep traditional banking on- and off-ramp relationships
(i.e., channels between fiat currency and stablecoins), as well as through distribution
contracts with leading consumer financial applications and payments enterprises." Please
expand to disclose the "deep traditional banking on- and off-ramp relationships" you refer
to, as well as the "distribution contracts with leading consumer financial applications and
payments enterprises" to which you refer. Please also revise to clarify what you mean by
your statement that "[m]oney is fundamentally a network" and identify the "leading
institutions" with which you have entered into partnerships, as your disclosure references.
14.We note your disclosure that "over time, [you] intend to monetize the activity on [y]our
network with products that can earn fee-based revenues based on transactions and usage."
Please expand your disclosure to describe your plans regarding products that can earn fee-
based revenues in greater detail.
Circle's role in driving stablecoin adoption, page 10
15.We note your disclosure on page 7 that "Circle has built one of the largest and most
widely used stablecoin networks in the world." Please disclose the basis for this
statement and any quantitative criteria you are using in support thereof, and please balance
your statement by disclosing that Circle holds a 22% stablecoin market share, as disclosed
on page 85. In addition, we note your disclosure throughout referring to Circle as the
"largest regulated stablecoin issuer in the world," as well as your disclosure on page 8 that
"[t]he USDC 'digital dollar' issued by Circle is a leading regulated payment
stablecoin." While it appears that certain aspects of your activities may be subject to
regulation or regulatory license, it is not clear the extent to which the material aspects of
your business and operations are actually subject to regulation or regulatory license.
Please balance your characterizations throughout by disclosing the extent to which the
material aspects of your business and operations are not "regulated" like banks and fiat
currency.
Risk factors, page 19
16.We note that you are not authorized or permitted to offer your products and services to
customers outside of the jurisdictions where you have obtained the required governmental
licenses and authorizations.  Describe any material risks you face from unauthorized or
impermissible customer access to your products and services outside of those
jurisdictions.
17.To the extent material, describe any gaps your board or management have identified with
respect to risk management processes and policies in light of market conditions (e.g., the
March 2023 regional banking crisis in the United States, including the Silicon Valley
Bank failure disclosed on pages 82 - 83, and other crypto asset market developments) as
well as any changes they have made to address those gaps.

 FirstName LastNameJeremy Allaire
 Comapany NameCircle Internet Financial Limited
 February 27, 2024 Page 5
 FirstName LastName
Jeremy Allaire
Circle Internet Financial Limited
February 27, 2024
Page 5
Stablecoin platforms and competition may limit the viability of Circle stablecoins, page 20
18.Please revise this risk factor to include a cross-reference to your discussion under the
subheading "Competitive landscape" on page 124.
The future development and growth of Circle stablecoins is subject to a variety of factors..., page
22
19.We note that this risk factor appears to include a number of risks. Please break this risk
factor into multiple risk factors.
There is regulatory uncertainty regarding the classification of Circle stablecoins..., page 25
20.We note your disclosure at the bottom of page 27 that in addition to Circle stablecoins,
you may "introduce and/or commercially support other digital assets." Please specifically
identify any such other crypto assets that you have plans to introduce and/or commercially
support.
Our customers' funds and digital assets may fail to be adequately safeguarded by us..., page 31
21.Please revise the second paragraph of this risk factor to briefly describe the types of losses
that your fidelity insurance covers, including quantitative disclosure regarding the amount
of coverage for your crypto assets and your customers' crypto assets.
Establishing connectivity with decentralized finance protocols..., page 37
22.To the extent material to understanding the risks described in this risk factor, please
identify the protocols to which you provide connectivity.
We obtain and process a large amount of customer data, including sensitive customer data...,
page 55
23.In an appropriate section, please describe in greater detail your data collection practices or
those of your third-party service providers. Briefly discuss whether you use any
optimization functions (e.g., to increase platform revenues, data collection and customer
engagement). To the extent your use of any optimization functions may lead to potential
conflicts between your platform and customers, please add related risk factor disclosure.
Management's discussion and analysis of financial condition and results of operations
Our business model, page 76
24.We note from your USDC Terms available on your website, the identification of "User
Type A - a Circle Mint account holder, currently only available to institutions located in
supported jurisdictions" and "User Type B - which for the avoidance of doubt, are not
customers of Circle, as Users Type B do not have a Circle Mint account," and
that only "Users Type A can redeem USDC directly with Circle." We note throughout
your disclosures the use of the term customer as it relates to USDC. Please enhance your

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 Comapany NameCircle Internet Financial Limited
 February 27, 2024 Page 6
 FirstName LastNameJeremy Allaire
Circle Internet Financial Limited
February 27, 2024
Page 6
discussion to:
•Clarify that a customer's initial step required to participate in your stablecoin network
is the establishment of a Circle Mint account, which is currently only available to
institutions in supported jurisdictions; and
•Differentiate between your customers and end users of USDC that are not your
customers.
Circle stablecoins, page 77
25.Please enhance your disclosures to clarify the following:
•Describe the relationship between the receipt of fiat to fund reserves and minting of
new USDC and EURC, including the timing of fiat receipt and that your stablecoins
are redeemable upon demand 1:1;
•Disclose, consistent with Section 15 of your USDC Terms, that you charge no
transaction fees for the minting and issuance of Circle stablecoins or for their
redemption; and
•That you earn revenue from your stablecoin business by investing the fiat received
upon minting and that such revenue is comprised of interest on the cash and cash
equivalents and debt securities underlying the Circle stablecoin reserves.
26.We note your disclosure that since January 2023, Circle stablecoin reserves have been
limited to balances held at banks and the Circle Reserve Fund, and your disclosure that
currently all EURC reserve assets are held only in cash. We also note your disclosure on
page 32 that "[y]our USDC reserve is managed in accordance with guidelines set forth in
[y]our USDC Investment Policy." Under an appropriate heading, please provide more
detailed disclosure r