Circle Explores $5 Billion IPO, Potential Coinbase Acquisition

Circle Internet Financial, the company behind the USDC stablecoin, has filed for an initial public offering (IPO) with aspirations for a $5 billion valuation. However, the company has also been quietly exploring the possibility of selling itself to either Coinbase, the largest crypto exchange in the U.S., or Ripple, a major crypto payments company. While the IPO remains on track, with no sale having occurred yet, industry insiders suggest that Circle would readily sell to Coinbase if approached.

Circle and Coinbase share a close relationship, having co-founded the Centre Consortium in 2018 to launch USDC. Although their partnership ended in 2023, Coinbase still holds a stake in Circle and shares revenue from interest earned on the reserves backing USDC. Coinbase's control over Circle’s operations, including major partnerships and intellectual property rights, positions it as a strong potential buyer. Additionally, Coinbase's financial strength, with $8 billion in cash and the ability to raise more capital, makes it a formidable contender.

Ripple has also made a bid to acquire Circle for $4-$5 billion, but this offer was rejected by Circle for being too low. Ripple holds over $100 billion worth of its XRP token, which it could use in a deal along with cash. However, Coinbase's existing ties with Circle and its stronger financial position make it the more likely buyer. Coinbase CEO Brian Armstrong has indicated that the company is open to deals, although there is nothing official to announce yet. Both Coinbase and Ripple have been actively acquiring companies recently, and the recovering IPO market could boost Circle’s confidence in going public.

Circle's decision to explore both an IPO and a potential sale to Coinbase or Ripple highlights its strategic flexibility in the evolving cryptocurrency market. The company's close relationship with Coinbase and the potential for a significant valuation make it a prime candidate for acquisition. However, Circle's IPO plans remain on track, and the company has not yet set IPO terms or started its investor roadshow. The outcome of these discussions will significantly impact the future of Circle and its USDC stablecoin.