USDC Issuer Circle to Relocate Legal Base to US Ahead of IPO: Why This Matters
USDC as a US Player?
Key Takeaways
- Circle is reportedly moving its legal base from Ireland to the US.
- The news comes ahead of Circle’s initial public offering (IPO).
- Circle-issued USDC is the second-largest stablecoin behind Tether.
Circle, the issuer of the second-largest stablecoin, is reportedly relocating its legal base from the Republic of Ireland to the United States.
The strategic move aligns with Circle’s confidential plans to go public, based on reports. The company could be aiming to capitalize on the credibility and market presence that a US base can provide, much like its peer, Coinbase.
Circle’s Move to the US: Strategic Shift Explained
Circle has filed court paperwork to shift its legal domicile from Ireland to the US, Bloomberg reported on May 15. While the company spokesperson confirmed this move to the paper, the reasons are unclear.
However, this strategic relocation is seen as a step towards bolstering Circle’s presence and credibility in the US financial market, similar to the path taken by Coinbase.
USDC, or USD Coin, is the Circle-issued stablecoin and is the second-largest behind Tether.
With a market capitalization of approximately $33b, USDC is the sixth largest crypto player by market cap. Tether’s USDT remains the largest stablecoin, with a market cap of $111b.
Understanding the IPO Process and SEC Review
In January, reports indicated that Circle confidentially submitted an S-1 draft registration statement to the US Securities and Exchange Commission (SEC). Its intention to go public is seen as the reason behind the move.
More details around the number of shares to be offered and their pricing are to be determined and will await SEC review.
The SEC review process is a critical step. The SEC evaluates the registration statement to ensure it includes adequate disclosures and complies with regulatory requirements. Typically, the SEC issues a comment letter within 30 days, outlining any deficiencies and requesting additional information.
According to PwC , non-US companies can raise capital in the US without registering with the SEC through an exemption called Rule 144A. This rule allows companies to offer securities for sale or resale to institutional investors without needing SEC registration. However, Circle’s decision to pursue an IPO and become a public company suggests it values the benefits of public exposure and the broader trading market in the US.
By establishing a legal base in the US, Circle could be aiming to gain credibility and align itself more closely with the US regulatory framework, which can enhance investor confidence. The move mirrors the strategy of Coinbase, which successfully established itself as a credible player in the US market, leveraging its regulatory compliance and market presence to attract institutional investors.
Moreover, the US market offers a significant opportunity for growth and expansion. Circle can also more effectively engage with regulators and policymakers, ensuring compliance with evolving regulations and standards in the cryptocurrency industry. Especially when a stablecoin regulation could potentially be underway in the US.
Stablecoin Player Changes Base
Circle’s decision to move its legal base to the US and pursue public listing marks could provide an investor boost for the stablecoin issuer. By aligning itself with the US regulatory framework and tapping into the US capital market, Circle might be aiming to enhance its credibility.
As the second-largest stablecoin issuer, Circle’s presence in the US could also give it more power over regulatory lobbying as the US potentially prepares stablecoin regulations.
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