Coinbase and Ripple Both Target Circle - USD Coin Issuer, with a Potential Valuation of $5 Billion, as Circle Plans Second IPO
The race to gain control of Circle - the second-largest issuer of USD Coin (USDC) stablecoin - is heating up as two cryptocurrency giants, Coinbase and Ripple, simultaneously show interest. According to Fortune magazine, Coinbase is currently considering acquiring Circle at a valuation of around $5 billion, as Circle prepares for its second IPO.
Previously, in April, Bloomberg reported that Ripple had proposed an acquisition of Circle with a valuation of $4 to $5 billion, but without success. Notably, Circle filed its listing prospectus on April 1st - just one day before former US President Donald Trump announced a series of market-shocking tariffs - marking its second attempt at listing after the failed SPAC IPO in 2022 due to the FTX collapse.
The relationship between Coinbase and Circle was built early on. The two companies co-founded the Centre Consortium in 2018 to oversee the issuance and operation of USDC. Although Centre has been dissolved, both parties still maintain a revenue-sharing agreement from USDC reserve interest - which brought Coinbase $910 million in 2024 alone. Acquiring Circle would help Coinbase both preserve a stable revenue source and consolidate its market-leading position in stablecoins.
With approximately $8 billion in cash on its balance sheet, Coinbase has the financial capacity to execute a high-cash-proportion deal. Additionally, Coinbase's stock - currently an S&P 500 member - is considered a more attractive payment vehicle than Ripple's XRP token in the context of ongoing market risks.
Coinbase CEO Brian Armstrong, in a recent Bloomberg interview, stated that the revenue-sharing agreement would not be affected by Circle's IPO, while keeping quiet about potential acquisition possibilities: "Any future deal depends on both parties. Currently, there's nothing to announce." However, a banking source quoted by Fortune suggests: "If Coinbase decides to buy, Circle would agree without hesitation."
For its part, Ripple sees this as a strategic opportunity to expand cross-border payment capabilities and increase its stablecoin market presence. Besides developing its own stablecoin, Ripple recently collaborated with Societe Generale FORGE to issue EURCV on XRP Ledger and connected with StraitsX to support the Singapore dollar stablecoin (XSGD). However, Ripple faces larger financial constraints: converting large volumes of XRP to fund the deal could create downward price pressure on the asset itself.
Timing also presents many constraints. Ripple just committed $1.25 billion to acquire the Hidden Road trading platform, while Coinbase recently announced the acquisition of the Deribit derivatives exchange for $2.9 billion. Additionally, Coinbase is facing a customer data leak with potential compensation costs of up to $400 million. These parallel financial commitments make pursuing another large M&A deal more complex for both parties.
For Circle, an IPO in the current volatile global financial market brings significant risks. If the listing process encounters obstacles, a reasonable acquisition offer - especially from an operational partner like Coinbase - could become a more viable option.
