Circle Seeks $5B Valuation in IPO or Sale to Coinbase, Ripple

Circle, the issuer of the stablecoin USDC, is actively pursuing an initial public offering (IPO) while simultaneously engaging in informal discussions with Coinbase and Ripple regarding a potential sale of the company. The stablecoin firm is reportedly seeking a valuation of at least $5 billion, either through a public listing or an acquisition. The talks with Coinbase and Ripple have been ongoing, with both companies expressing interest in acquiring Circle.

Circle initially filed for an IPO in April with the goal of completing the process by the end of that month. However, the company indicated that it might delay its IPO due to economic uncertainty. This uncertainty has led Circle to explore other options, including a potential sale to either Coinbase or Ripple.

Coinbase appears to be the more likely buyer. The two companies have a history of collaboration, having co-founded the Centre Consortium in 2018 to issue USDC. This partnership has resulted in shared revenue from reserve interest, and Coinbase holds a 100% share of revenue from USDC held on its platform. Additionally, Coinbase has influence over Circle’s partnership decisions and intellectual property rights. With a strong financial position, Coinbase is in a favorable position to acquire Circle.

Ripple has also shown interest in acquiring Circle, reportedly making an offer between $4 billion and $5 billion. However, this bid was rejected by Circle as being too low. Ripple could potentially leverage its large XRP reserves to fund a deal, but Coinbase remains a stronger financial contender. Coinbase CEO Brian Armstrong has hinted at openness to future deals with Circle, despite the company's ongoing IPO plans.

The possibility of a strategic sale remains in play, as Circle's IPO hopes may be buoyed by the recent strong debut of eToro. However, the outcome of these discussions is uncertain, and Circle's future as a publicly traded company or as part of a larger organization remains to be seen. The company's decision will likely depend on market conditions and the terms offered by potential buyers.