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Circle’s plan to go public is cancelled. What does this mean?



Key points

  • Circle, the issuer of USDC, has cancelled a proposed IPO in a $9 billion deal.
  • The public listing could have presented USDC as the anti-Tether, pushing a fully transparent and audited angle.
  • The cancelled deal reflects declining prices at all levels.
  • Circle remains determined to go public, but in the meantime will continue to wage the stablecoin war against rivals.
  • Binance, the recent big player after the exchange dumped USDC and other rivals to push its own stablecoin, BUSD.

Stablecoin group Circle abandoned its plans to go public.

An issuer of USDC, the stablecoin with a market capitalization of $43 billion, Circle had planned to go public at a valuation of $9 billion. However, Sam Bankman-Fried and the cryptocurrency markets had other ideas.

Abandoned plan means the collapse of cryptocurrencies.

The failure of the deal shows just how far cryptocurrencies have fallen. The deal originally closed in July 2021, with Circle planning to go public through a blank check company run by Bob Diamond, a former Barclays executive.

“We are disappointed that the proposed deal has expired; however, becoming a public company is part of Circle’s core strategy to foster trust and transparency, which has never been more important,” said Jeremy Allaire, CEO of Circle.

It’s no surprise. Initial public offerings (IPOs) have been on hold across the market – not just cryptocurrencies – as rising interest rates have driven down prices across the board. Look no further than Coinbase as proof of the damage, with its shares falling 84% in 2022 (I wrote a detailed analysis of its demise here).

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Public safety, desirable for stablecoins.

The stablecoin sector has been the hardest hit this year. May saw the resounding collapse of UST, which took much of the ecosystem by storm.

DAI is struggling mightily, in the curious position of being a decentralized stablecoin play that is highly centralized (given its USDC holdings). Their latest plan is to abandon the peg model altogether and move to a floating stable coin, which, in my opinion, is a complete paradox.

But it is the continued speculation about the safety of Tether (extended analysis here), which has fallen to 95 cents on several exchanges following the collapse of UST, that remains the biggest complaint about stablecoin.

This is where USDC could have really benefited from Circle’s IPO. The security, disclosure and transparency required to be a public company are unparalleled. This move would have greatly benefited Cicle’s image, especially compared to its larger rival, Tether.

It really could have positioned itself as the anti-Tether, the fully public and therefore audited, transparent and secure stable coin. So the biggest winner in this news of the collapsed deal is undoubtedly Tether.

The stablecoin war continues

One hopes that Circle will eventually go public. I’m sure it will, but it could take a while, given the state of the markets, with inflation yet to slow down considerably and the global economy struggling as Europe and the U.S. plunge into winter amid a choking energy crisis.

Until then, it will continue to battle its rivals for market dominance. The most recent winner in all this was Binance’s stablecoin, BUSD, after the exchange removed USDC and several other competitors from its exchange.

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USDC was supposed to be holding the listing ace up its sleeve. But now that this has been canceled, it’s back to the drawing board in terms of the stablecoin war.

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