Circle Internet Financial LLC, the USDC stablecoin issuer, revealed on Thursday, January 11, 2024, that it had confidentially filed for a US IPO. The filing is part of Circle’s plan to go public.
Details of the Circle IPO
In its announcement, Circle did not reveal how many shares it would issue or its price range. The company stated that the IPO will launch once the SEC completes its review.
Circle’s journey to becoming a publicly traded company began in 2022. At the time, the company’s valuation was $9 billion. It had planned to go public via a special-purpose acquisition vehicle in a deal with Concord Acquisition. However, the deal timed out, with CEO Jeremy Allaire expressing disappointment.
In February 2022, the deal with Concord was delayed as Circle sought to renegotiate its agreement to double the proposed value. In its initial SEC filing, Circle had been valued at $4.5 billion. However, the deal faced challenges getting regulatory approval. That year’s collapse of the crypto market made it tougher to conclude the deal.
Circle’s Performance
There are currently around $25 billion USDC in circulation, a huge fall from the $56 billion peak in mid-2022. After the collapse of Terra Luna and the FTX exchange, investors became cautious. It triggered a domino effect that impacted numerous firms in the crypto sector. In July 2023, Circle announced layoffs. At the time, it said it was cutting non-core business operations.
Based in Boston, Circle is backed by industry giants, including Fidelity, BlackRock, and Goldman Sachs. Its USDC stablecoin is the second-biggest with a $25 billion market cap. The biggest stablecoin is Tether’s USDT, which has a market cap of around $94.63 billion.
How Soon Will the IPO Launch?
An IPO will be a longer process, which will see the SEC rigorously scrutinize the company. Its initial SPAC route would have been easier and take less time. An SEC filing entails investment bank underwriting, which is more complex. However, once complete, it will allow Circle to capitalize on opportunities available in the public market.
Traditionally, the SEC takes six to nine months to approve an IPO. However, that only happens if the team filing for the IPO is well-organized. Barring any unforeseen challenges, the SEC could approve the Circle IPO around July-October 2024.
Should You Buy Circle Stock
When Circle launched in 2013, it had the grand vision of redefining the payment industry. Its goal was to enable near-instant transactions from anywhere around the world. However, that vision has suffered setbacks, and the USDC stablecoin is not even the biggest by market cap. Despite these challenges, the company has stayed afloat for over a decade. Once it goes public, the fresh capital injection could help propel it to new heights.
However, its goal of growing its stablecoin-backed payment system could be challenging. For instance, the US Federal Reserve has been working on a proposed Central Bank Digital Currency for several years. If launched, it would eliminate most of the advantages USDC offers customers. Circle’s business model is viable, and its stock could experience an initial bump in price once it goes public.
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