Circle Navigates a Delicate Balance Between IPO Ambitions and Acquisition Interest

As Circle moves forward with its long-anticipated IPO, behind-the-scenes negotiations suggest a possible change in trajectory that could reshape the stablecoin landscape

Circle, the company behind the USDC stablecoin, is reportedly juggling interest from two crypto giants, Ripple and Coinbase, as it prepares for a potentially derailed initial public offering (IPO).

According to a report by Fortune, Circle is still planning to go public. However, it’s also in talks to be acquired by two of the biggest names in crypto.

Two Acquisition Bidders Emerge

Insiders have hinted at Circle's openness to a takeover, especially if Coinbase were to make a "credible" offer, according to one investment banker involved in the negotiations.

"If Coinbase wanted to buy them, Circle would sell in a heartbeat," the banker told Fortune, highlighting the strong partnership between the two companies.

Together, they launched the Centre Consortium in 2018, which was initially responsible for issuing USDC. Later, the consortium was dissolved, leading to Coinbase acquiring an equity interest in Circle as part of the transition.

The two companies also share revenue from USDC reserves equally. However, Coinbase keeps all the revenue generated when USDC is held directly on its platform, a significant source of income that has contributed to Coinbase's recent financial success.

A merger would align operationally, but successful integration remains a key factor. Coinbase CEO Brian Armstrong has shown interest in strategic acquisitions but stressed the need for a clear plan for post-merger execution.

Earlier reports suggest that Ripple made an initial bid to acquire Circle for $4 billion to $5 billion, which was reportedly declined. Still, Ripple, with billions in its native digital asset, XRP, might return with a more competitive offer.

Any acquisition by Ripple would likely involve a mix of XRP and fiat, in contrast to Coinbase's proposal, which would be fully in cash. This model offers flexibility but might raise questions among regulators and market participants over valuation consistency and market impact.

As one of the dominant stablecoins, USDC plays a role in DeFi protocols, centralized exchanges, and cross-border payments. Any shift in its governance or ownership would affect the competitive landscape.

For instance, an acquisition by Ripple would dramatically expand its influence in stablecoin markets, potentially complementing its upcoming launch of a USD-backed stablecoin (RLUSD). It would also align with Ripple's long-term goal of integrating XRP into global financial infrastructure, though some analysts believe that absorbing a company as complex as Circle could distract from Ripple's core mission.

If Coinbase were to succeed, it would solidify its control over both USDC's governance and distribution, further cementing its role in the digital asset economy. It could also set a new precedent for centralized exchanges, deepening their footprint in the stablecoin sector.

While Circle is still planning for its IPO, which is being prepared by Goldman Sachs and Morgan Stanley, sources suggest that the next few weeks may prove decisive, with high-level negotiations unfolding rapidly.

Whether Circle chooses to go public or be acquired by a crypto giant, the decision will undoubtedly reshape stablecoin dynamics and have implications for the broader digital asset industry.