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Circle Going Public: What It Means for the USDC Issuer

Last Updated January 12, 2024 3:38 PM
Josh Adams
Last Updated January 12, 2024 3:38 PM
Key Takeaways
  • The co-creator of the world’s most popular stablecoin has announced plans to go public.
  • It had previously abandoned ambitions to go public in 2022.
  • The news has provoked a general sense of optimism in crypto world, following recently approved spot Bitcoin ETFs.

Cryptocurrency company Circle is officially trying to go public , filing confidential IPO plans with the SEC. The company has yet to announce the number of shares and their price range for the upcoming public offering. The offering is expected to take place following a review by the SEC.

The company was reportedly considering an IPO back in November, according to Bloomberg . Its flagship product, USD Coin (USDC), is the world’s most popular stablecoin, and a linchpin of decentralized finance (DeFi). But what will going public mean for the firm?

Circle Co-Launched the World’s Most Popular Stablecoin

What exactly does Circle do? The Boston-based fintech firm founded USDC in 2018 alongside cryptocurrency exchange Coinbase. The so-called “stablecoin” maintains its value via reserves of cash and US Treasuries. Today USDC ranks among the world’s largest cryptocurrencies with a $25 billion market capitalization, according to CoinMarketCap .

Now Circle wants to go public, a goal it’s held since its SPAC merger imploded  in 2022. Despite obstacles, Circle sees a public listing building trust and transparency for USDC users. Across the industry, the reaction to Circle’s announcement has been widely positive. This is true not just for the company itself, but also for crypto in general. 

Bryan Levine, CEO & co-founder of Sock , told CCN: “As the first company that isn’t a Bitcoin miner or Coinbase to go public in the space, USDC-creator Circle’s IPO will bring a huge wave of legitimacy to the crypto space.” 

The path won’t be easy, however. The company will have to prove to regulators that everything is above board.

Specifically, the Circle will have to prove they can “connect the dots between every dollar they hold and the merchants on the platform,” added Levine. Their reserves will receive unprecedented scrutiny. This is, perhaps, understandable after 8% of USDC’s $40 billion in reserves were exposed  to the collapsed Silicon Valley Bank in March 2023, causing a sudden depegging.

Going Public: A Stamp of Legitimacy

An IPO could further cement USDC as crypto’s safest, most transparent option for stablecoins. A type of digital asset that has come under much scrutiny in recent years.

Compared to Tether, the issuer of USDT, the second most popular stablecoin, Circle has built a reputation of working more closely with law enforcement. Robert Whitaker, a law enforcement expert at Blockchain Intelligence Group, told CCN: “Circle has been a responsible player in the cryptocurrency and digital asset space since I first met with them in 2015.” Whitaker said Circle was widely recognized as a “compliance-centered business,” and the IPO was a “great move.” 

It’s not just about their stablecoin, though. Their Cross Chain Transfer Protocol (CCTP ), which allows USDC to move natively between blockchains, is one of the biggest bridging protocols in crypto. It allows USDC and (eventually) EUROC to be “the cross-chain exchange token as well as the preeminent stablecoin,” Dave Balter, CEO of Flipside Crypto told CCN.

He added: “They went through some struggles in 2019 and made an intense bet to bet it all on USDC; and here they are near the summit. It’s impressive.”

The move to go public may also raise capital to expand Circle’s payments network into remittances, international commerce and smart contracts. The company already works with merchants, vendors and debit card providers to enable USDC transactions.

A Vote of Confidence in the US Market?

Circle choosing to go public in the US is a positive sign for the American crypto landscape. The regulatory environment in the United States has often been anything but friendly to the digital assets sector. This has been especially true when it comes to securities classification.

Eleanor Terrett, a journalist at FOX Business and chronicler of the industry’s regulatory dramas, said: “It’s an optimistic bet that the regulatory landscape could become more navigable if big crypto firms are opting to stick around to take advantage of the US markets.”

Ultimately, the IPO is—much like the recent approval of spot Bitcoin ETFs—a growing sign of the intersection between traditional finance and crypto. It points towards a future where companies like Circle are “more integrated into mainstream financial structures,” Jake Hunsbusher, Core Contributor at Kinetic  told CCN.

“However, as the crypto market continues to mature and face regulatory challenges, the true impact of such IPOs on the wider financial ecosystem remains to be seen.”

 

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