Why Shares of Circle Are Surging Today

Shares of the stablecoin issuer Circle (NYSE: CRCL) traded nearly 8% higher, as of 12:46 p.m. ET today, but had blasted as high as 24% earlier in the day. The move came after Circle announced a strategic partnership with Fiserv.

Bringing stablecoins to traditional banking

Circle issues large stablecoins like USDC and EURC. Stablecoins are digital assets pegged to a commodity or currency. USDC is pegged to the U.S. dollar, while EURC is pegged to the euro. Both stablecoins are pegged on a 1-to-1 basis, meaning that Circle actually has one dollar or one euro to back each stablecoin, so they can easily be redeemed.

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The idea of stablecoins is to harness the technology from digital assets that allows people to transfer money instantly over the internet without a bank account, but without the volatility that tends to come with most cryptocurrencies. Fiserv is a leading core processing provider for traditional banks, so it powers a lot of the plumbing that banks need to make daily transactions possible.

Circle and Fiserv announced that they will "jointly explore and develop stablecoin-enabled solutions for financial institutions and merchants within the Fiserv ecosystem."

Jeremy Allaire, chairman and CEO of Circle, said in a statement:

As demand for real-time, borderless financial experiences accelerates, this collaboration reflects our commitment to supporting forward-thinking financial institutions. Fiserv is a trusted leader in enabling money movement across the financial ecosystem. By integrating with Circle's infrastructure, Fiserv is positioned to extend the benefits of stablecoin-based payments and open internet finance to thousands of financial institutions.

Off to a hot start

If you've followed the crypto story, you know that integrating digital assets into the traditional banking system is viewed as a big catalyst. This partnership with Fiserv could be a big step in that direction and dramatically increase USDC's use.

However, Circle is now up close to 735% since going public earlier this month. The company made about $155 million in 2024 and now has over a $56 billion market cap. I'd probably let this one simmer a bit.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.