Luisa Beltran
5 min read
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Circle Internet Financial, the issuer of the crypto stablecoin USDC, filed paperwork in early April to go forward with a long-awaited initial public offering. There is a chance, though, that Circle’s IPO won’t come to fruition since the company has recently taken part in informal talks to sell itself to Coinbase Global, the largest crypto exchange in the U.S., or to crypto payments company Ripple, according to four banking and private equity executives. These people, who asked not to be identified in order to comment on private negotiations, said Circle is seeking at least $5 billion, which is the valuation that it’s targeting for its IPO.
“If Coinbase wanted to buy them, Circle would sell in a heartbeat,” one of the sources, a banker, said.
“Things change week by week,” a second person said.
Circle is still committed to going public, the people said. In April, Circle publicly filed for its long-awaited initial public offering. It has yet to set terms for the IPO and the roadshow has not launched.
Coinbase and Ripple did not return messages for comment. “Circle is not for sale. Our long-term goals remain the same,” the company said Monday in an emailed statement to Fortune.
Coinbase and Circle have a history together, having launched Centre Consortium, a joint venture responsible for issuing the USDC stablecoin, in 2018. When the terms of that venture wound down in 2023, Coinbase gained an equity stake in Circle, while Circle assumed all governance for USDC, Fortune has reported. The companies have continued to share revenue from USDC’s reserve interest income and, overall, the arrangement contains several provisions that are notably favorable to Coinbase.
The baseline provision of the Circle-Coinbase calls for each party to receive 50% of residual revenue generated from reserves backing Circle’s USDC stablecoin, according to Circle’s S-1 filing. Significantly, however, Coinbase earns 100% of that revenue if the USDC in question is stored on the crypto exchange’s platform. This scenario has likely become more common in recent months, based on recent Coinbase earnings filings that show rising income from the USDC partnership (though some of the growth may be from the overall stablecoin pie growing bigger in recent months).
Meanwhile, the current agreement gives Coinbase significant control over Circle’s operations in other respects. This includes a provision that Circle can’t form any new third party partnership agreements that affect Coinbase’s USDC revenue without the latter’s consent, and another that gives Coinbase partial control over its intellectual property in the event of insolvency. For these reasons, many view Coinbase as the most logical buyer of Circle.
