Circle, the stablecoin issuer behind USDC, is actively pursuing a public listing while also exploring acquisition interest. The company remains committed to its IPO, but informal talks with Coinbase and Ripple have begun. This dual-track approach reflects shifting priorities as Circle targets a $5 billion valuation.
Coinbase Positioned as Lead Contender
Circle has submitted its initial public offering papers to the SEC, hoping to go public by this year. While these conversations were still being held, Coinbase was considered the most suitable potential buyer. While created with only exploratory objectives, such talks can cause something big to happen.
Because of the existing bond between Circle and Coinbase, any prospective deal will give Circle an upper hand. In 2018, Circle and Coinbase founded and led the Centre Consortium to develop their stablecoin, United States Dollars Coin. Circle acquired complete power after breaking up the partnership in 2023, and Coinbase was granted equity and a portion of the earnings.
Circle’s S-1 reveals that all of Coinbase’s revenue in the USDC segment comes from USDC held on their platform. Other types of USDC reserves have companies split the net revenue between them. Being partners limits Goldman Sachs’ and Circle’s ability to decide on certain business moves.
Certain insiders point out that the companies share such close ties that they seem almost indivisible. They can oversee important aspects of USDC and have some intellectual property rights when Coinbase is insolvent. The framework helps Coinbase to remain strong in any plans for future sales events.
Ripple’s Offer Rejected as Too Low
Ripple Labs also approached Circle with an acquisition offer ranging from $4 billion to $5 billion. The proposal included a combination of cash and XRP, Ripple’s native token. However, Circle reportedly declined the offer, citing valuation concerns.
Ripple’s financial strength comes from its XRP holdings and active acquisition strategy. As of the end of March, Ripple held 4.56 billion XRP on its balance sheet. It also controls 37.13 billion XRP in escrow, giving it substantial liquidity.
Ripple has shown interest in expanding its footprint through acquisitions, including a $1.25 billion purchase of Hidden Road. However, Ripple’s mixed offer failed to meet Circle’s internal valuation goals. The company’s preference for cash-heavy deals could hinder further negotiations.
Although Ripple is active in M&A, Coinbase is seen as better equipped for this acquisition. Coinbase’s cash reserves and public listing status give it greater flexibility. Insiders note that Coinbase will likely gain more discussion traction if it pursues a formal offer.
IPO Plans Still Moving Forward
Despite the M&A interest, Circle continues to prepare for its IPO. The company filed with the SEC in April and aims to list with a near $5 billion valuation. Its IPO plans remain intact, even while alternative options are being weighed.
Private equity sources say the situation evolves weekly, and market conditions may affect final decisions. While Circle has not ruled out an acquisition, it has not paused its public listing efforts. Investors are closely watching the outcome of this dual-path strategy.
Coinbase has already completed several acquisitions this year, including Deribit and Spindle. CEO Brian Armstrong said Coinbase is evaluating more deals but remains selective. Any future move to acquire Circle would likely follow a thorough financial and regulatory review.
FAQs
Why is Circle considering a sale if it plans to go public?
Circle keeps its options open as market conditions shift and acquisition interest grows.
What role does Coinbase play in Circle’s operations?
Coinbase shares revenue from USDC reserves and influences some strategic decisions through prior agreements.
Why did Circle reject Ripple’s acquisition offer?
The offer did not meet Circle’s valuation expectations and included XRP instead of an all-cash deal.
Is Circle still moving forward with its IPO?
Yes, Circle continues its IPO preparations, although discussions about a sale are ongoing.
How much is Circle seeking in its IPO?
Circle is targeting a valuation of approximately $5 billion in its initial public offering.
Glossary of Key Terms
Circle: A fintech company and stablecoin issuer known for USDC.
USDC: A dollar-pegged stablecoin issued by Circle.
IPO: Initial Public Offering, a process through which a private company lists its shares publicly.
Coinbase: A major U.S.-based cryptocurrency exchange.
Ripple: A blockchain company behind XRP, a digital payment protocol.
M&A: Mergers and Acquisitions, business transactions involving consolidation of companies.
S-1 Filing: A registration form submitted to the SEC for companies planning to go public.
XRP: The native cryptocurrency of Ripple Labs used for cross-border transactions.
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