Circle Plans IPO as Stablecoins Flex Market Muscle
Circle could debut on the NYSE as soon as next month and is eyeing a valuation of up to $5 billion — a $4 billion drop from its SPAC era.
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Circle is living up to its name: After scrapping its SPAC plans three years ago, the stablecoin issuer completed a 360-degree turn and filed for an IPO yesterday. Circle could reportedly debut on the NYSE as soon as next month and is eyeing a valuation of up to $5 billion — a $4 billion drop from its SPAC era. Still, it’d be the crypto industry’s largest IPO since Coinbase went public in 2021.
Circle said its SPAC attempt “simply termed out” after multiple extensions, but the Financial Times reported the SEC didn’t approve the deal. Following POTUS’ pro-crypto overhaul of the SEC, Circle could get a warmer welcome this time around.
Around and Around
Circle’s stablecoin, USDC, which like many stablecoins is pegged to the US dollar, is the second-largest stablecoin behind Tether, with roughly $60 billion worth in circulation.
- While Tether dominates stablecoins with 67% market share, USDC is gaining ground fast: Its market cap surged 36% this year, while Tether gained 5%.
- Coinbase, which has a deal to pocket half of USDC’s revenue, said it plans to push the stablecoin into the No. 1 spot.
The stablecoin market expanded nearly 50% last year and has gained more than 10% so far this year as investors pile into the digital asset. Though stablecoins are generally perceived to be less volatile than other cryptocurrencies (especially memecoins), they could still carry risk.
USDC depegged from the US dollar in 2023, temporarily trading below 87 cents, following the collapse of Silicon Valley Bank. Coinbase paused redemptions of USDC after traders cashed out $1.6 billion worth.
The year before, stablecoins’ rep was hurt when TerraUSD dramatically depegged from the US dollar, losing virtually all of its value. But while USDC depegged because a chunk of its reserves was tied up at Silicon Valley Bank, TerraUSD wasn’t backed by real-world assets.
The Gateway Crypto: The crypto industry is setting stablecoins up as the safer, more reliable alternative to traditional cryptos. Financial institutions are on board, with JPMorgan Chase and Citigroup underwriting Circle’s IPO. So is Washington: A bill regulating stablecoins was approved by a Senate committee last month, and a House committee is expected to vote on parallel legislation today. If stablecoins can live up to their name, they could have a halo effect on the wider crypto industry.
