Circle Completes Reverse Merger, Doubling Its Valuation

Circle, one of the top stablecoin issuers in the crypto market, has been on an exciting trajectory since it broke into the limelight.

Circle Completes Reverse Merger, Doubling Its Valuation

With the company’s USDC stablecoin doing well and becoming a favorite among investors, Circle is riding a wave of popularity as it prepares for its public debut.

Double or Nothing for Circle

In mid-February, Circle announced it had closed its initial business merger deal with Concord Acquisition Group - a special purpose acquisition company (SPAC) committed to helping it go public. Both firms have come up with a new agreement that will value Circle at $9 billion, putting the stablecoin issuer in a better financial position for its initial public offering (IPO).

In its announcement, Circle said the new agreement could be finalized by December of this year - though it could extend into January 2023.

Circle and Concord first announced their joint venture in July 2021. At the time, the Goldman Sachs-backed stablecoin issuer agreed to be acquired along with Concord by an Irish-based holding company. The company lists on the New York Stock Exchange under the “CRCL” ticket.

The initial deal valued Circle at $4.5 billion. Investors committed $15 million in public and private equity financing. Combined with cash in Circle’s trust and the company’s convertible note financing, the equity investment would give the stablecoin issuer about $1.1 billion in total proceeds.

Speaking to reporters, a spokesperson for Circle said the new agreement reflects a commitment from both parties to advance the deal. They knew they wouldn’t meet the original closing date for the initial deal and mutually agreed to revisit the terms and extend the date. The report added:

“It was clear that the original deal would not be closed within the time parameters of the original business combination agreement (April 3, 2022). As part of the negotiation to extend the deal, the value of Circle was updated to reflect improved financial performance and the competitive position of USDC, along with a new initial outside date, December 8, 2022.”

A Bullish Year For A Rising Stablecoin

While deadline issues are the primary challenge, Circle appears to have more leverage now that its stablecoin is gobbling up more and more of the market.

At the start of February, Circle chief executive Jeremy Allaire confirmed that USDC’s market capitalization had jumped to $50 billion for the first time. Calling it a massive number, Allaire attributed the growth to increased cryptocurrency activity - particularly stablecoin metrics.

According to current data from CoinMarketCap, Tether’s USDT remains the most dominant stablecoin with $79.5 billion in market cap. However, USDC is now a close second with $53.4 billion - and gaining fast.

For reference, this time last year, USDT had a market dominance of 74 percent while USDC just had 15 percent. Now, USDC holds an impressive 29 percent of the market while USDT’s dominance has fallen to 43.6 percent.

With the rise of upstarts like the Binance dollar-pegged stablecoin and TerraUSD, USDT could be in trouble. But USDC is soaring.

Through 2021, USDC’s market cap grew by an impressive 987 percent. Comparatively, USDT only managed to grow by 275 percent. USDC also benefits from massive adoption. The asset is supported by over 200 protocols and runs on eight different blockchains. USDT remains the dominant force in the stablecoin market, but all signs point to USDC gaining fast.

More To Look Forward To

Circle is also expanding its entry into business activities for everyday people. Last month, the company launched a new account service targeted at helping businesses to make crypto transactions. The Circle Account allows companies to deposit, withdraw, and store cryptocurrencies. Payments are settled in USDC, with the Circle Account enabling companies to integrate crypto payments into operations seamlessly.

The company said Circle Account users have increased by 213 percent since the account’s soft launch in 2020.

Circle was also one of the foremost partners in launching Solana Pay - a tool allowing e-commerce companies and point-of-sale operators to settle payments in crypto. Solana Pay allows users to make easy crypto settlements, supporting assets such as SOL, FTT, and USDC.

With a growing market and an asset growing more attractive by the day, Circle deserves a revisiting of its public debut deal.


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