Efforts for public listing – Circle fintech second attempt for IPO

Category: Blockchain Crypto Fintech

Posted by Lea Hogg Posted: Jan 24, 2024

Circle Internet Financial, the operator behind the USDC stablecoin, has made a confidential filing with the US Securities and Exchange Commission (SEC) for a potential initial public offering (IPO).

This move marks the company’s second attempt at going public, having abandoned its plans just over a year ago. The decision comes amid a pivotal week for the digital assets market, following the SEC’s approval of 11 spot bitcoin exchange-traded funds (ETFs). Leading asset managers such as BlackRock, Fidelity, and Invesco are set to run these ETFs, signalling a significant development for the cryptocurrency sector.

Rise in crypto companies seeking public listing

Digital asset enthusiasts view the approval of bitcoin ETFs as a transformative moment, enabling traditional money managers to engage with regulated stock market funds directly investing in bitcoin without holding the cryptocurrency itself. Andrew Bond, a senior research analyst at Rosenblatt Securities, anticipates a surge in companies within the crypto space going public in the wake of these approvals.

Circle’s IPO attempt also aligns with hopes for improved market conditions for newly listed businesses, reflecting a broader trend as various companies, including Amer Sports, owner of outdoor clothing brand Arc’teryx, healthcare platform BrightSpring Health Services, and casual dining chain Panera, express interest in potential listings. Optimism arises as expectations grow that the Federal Reserve may gradually reduce interest rates this year.

Bob Diamond led SPAC

Previously, Circle’s plans for an IPO faced a setback in December 2022 when it abandoned a $9 billion merger with a special purpose acquisition company led by former Barclays chief executive Bob Diamond (in photo above). The SEC had not ratified the deal before the deadline, leading to its dissolution.

At that time the deal gave Circle an enterprise value of $4.5 billion.

Circle’s USDC stablecoin, currently the world’s second-largest stablecoin after Tether, boasts $25.1 billion in tokens in circulation. Stablecoins, designed to mirror the value of state-backed currencies like the US dollar, play a pivotal role in facilitating swift and smooth transitions between different cryptocurrencies in the market. However, Circle faced challenges last year as its global market share declined significantly after disclosing its holding of approximately $3 billion in the now-collapsed Silicon Valley Bank.

Coinbase has minority stake in Circle

This revelation temporarily caused the USDC stablecoin to lose its peg to the US dollar, trading as low as 88 cents. At the time of the Silicon Valley Bank’s collapse, there were $43 billion worth of USDC tokens in circulation.

Circle has not provided details on the number of shares it intends to list or the proposed price range. The company states that the IPO will proceed after the SEC completes its review. In August, Nasdaq-listed exchange Coinbase acquired a minority equity stake in Circle, though the size and price of the investment remained undisclosed.

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