- Coinbase is reportedly considering acquiring Circle, the issuer of the USDC stablecoin, for $5 billion.
- Earlier, Ripple made a $4–$5 billion bid for Circle that was rejected.
- Circle recently filed to go public, marking its second attempt after a canceled 2022 SPAC deal.
- Coinbase and Circle share a significant revenue agreement tied to USDC, which heavily impacts both companies’ earnings.
- Additional acquisitions and ongoing events pose timing and capacity challenges for both Coinbase and Ripple in pursuing a potential deal.
Coinbase is reportedly interested in acquiring Circle, the company behind the USDC stablecoin, in a potential deal valued at $5 billion. The interest follows a prior bid from Ripple between $4 billion and $5 billion, which Circle turned down, according to Fortune.
On April 1, Circle published its stock prospectus as it prepared for an initial public offering (IPO). The move came after its earlier plan to go public via a SPAC merger ended in 2022, following the collapse of FTX. According to Fortune, an unnamed banker stated, “If Coinbase wanted to buy them, Circle would sell in a heartbeat.” Circle responded to Fortune that it remains focused on its IPO.
Coinbase CEO Brian Armstrong commented to Bloomberg that Circle’s IPO would not change their revenue-sharing agreement, which is currently in place. Armstrong said about any future acquisitions, “in terms of other deals we might consider in the future, I mean, that, of course, would be up to them and us, but, you know, nothing to announce today.”
The two companies have a long partnership. In 2018, Coinbase and Circle co-founded the Centre Consortium, which managed the USDC stablecoin. Though the consortium later ended, both companies continue to benefit financially from a revenue-sharing agreement. Under this deal, Coinbase receives a share of interest earned on USDC reserves, bringing in $910 million in 2024. This arrangement is a major revenue source for both but also limits Circle’s profit as it shares income with Coinbase.
If Coinbase acquires Circle, the exchange would gain more control over its USDC earnings and reinforce its stablecoin position. Coinbase holds about $8 billion in cash, which gives it flexibility for a cash-heavy deal. Its publicly traded status as an S&P 500 company also adds to its strength compared to Ripple, whose XRP cryptocurrency is more volatile.
A potential Ripple acquisition of Circle could expand cross-border payment capabilities and enhance its platform for issuing new stablecoins. Recent Ripple partnerships, including one with Societe Generale FORGE to issue a euro stablecoin and with StraitsX to issue a Singapore dollar stablecoin, show its interest in the stablecoin sector. However, Ripple’s need to convert large amounts of XRP to fund a deal could impact XRP’s price.
Timing is a challenge for both buyers. Ripple recently committed $1.25 billion to buy Hidden Road, while Coinbase is finalizing a $2.9 billion purchase of Deribit. In addition, Coinbase is handling customer compensation costs after a data breach, which could reach $400 million, potentially affecting its financial capacity for another acquisition.
As Circle pursues its IPO amid a turbulent market, a buyout may become more attractive if public offering conditions worsen. The outcome of these acquisition talks could reshape the stablecoin sector, especially the future of USDC, currently the second-biggest stablecoin by market cap, and influence who holds the leading position in the expanding digital asset industry.
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