As the adoption of stablecoins in the global financial system continues to ascend, a battle of power is unfolding privately. Circle, the entity behind USDC, announced its intention to go public in the U.S. in early April, targeting a valuation of a minimum $5 billion.
Despite its public pursuit of an IPO, Circle is reportedly considering a potential sale to two crypto behemoths – Coinbase and Ripple, as per a report by Fortune. This move could completely redefine its public listing plans, as claimed by four banking and private equity executives.
Even though Circle is adamant about its IPO, it has not yet initiated its IPO roadshow or settled on terms. This indecisiveness paves the way for unforeseen outcomes. Coinbase has an equity stake in Circle and both companies jointly earn revenue from USDC’s reserves. Importantly, Coinbase gets all reserve revenue when USDC is stored on its platform, a recurring pattern seen in its earnings reports.
According to Circle’s S-1 filing, Coinbase benefits from more than just revenue. Major new partnerships for USDC require the consent of Coinbase. Additionally, Coinbase owns partial rights to Circle’s intellectual property in case of insolvency. These terms position Coinbase as a likely acquirer as well as a partner. The publicly traded exchange has the financial strength to finalize a deal rapidly, with $8 billion in cash and a $56 billion market cap. Its recent inclusion in the S&P 500 has only increased its momentum.
Ripple also has a stake in this, having reportedly proposed a $4–5 billion bid to acquire Circle. This bid was turned down for being too low, yet Ripple, with approximately $11.8 billion worth of XRP and almost $96 billion more in escrow, has the capability to revisit their offer. The offer is expected to be a mix of XRP and cash.
Stablecoins like USDC are often perceived as the digital counterpart of the U.S. dollar. Controlling Circle could equate to influencing a crucial part of the upcoming financial infrastructure.
Circle’s IPO aspirations are still alive. The recent success of eToro’s premiere, with shares skyrocketing 29% on the first day, might propel Circle to push through. However, insiders hint that an acquisition could still be a viable option.
