Coinbase (COIN) Expands Its Empire by Acquiring Circle Internet Financial, the Firm Behind USDC Stablecoin

In a development stirring waves across the crypto industry, as reported by Fortune, Circle Internet Financial—the firm behind the USDC stablecoin—filed formal paperwork

In a move that has significant implications for the cryptocurrency industry, Circle Internet Financial, the company behind the USDC stablecoin, filed paperwork early April to advance toward a long-anticipated initial public offering (IPO), as reported by Fortune. However, despite this, insider chatter suggests the IPO may not materialize as planned.

According to four banking and private equity insiders who spoke anonymously due to the sensitive nature of the discussions, Circle has been informally exploring a potential sale to Coinbase Global, the leading U.S.-based cryptocurrency exchange, or Ripple, the crypto payments powerhouse.

Circle Targets a $5 Billion Valuation

Circle is aiming for a minimum $5 billion valuation, aligning with its goals for going public. One of the bankers familiar with the negotiations candidly remarked, “If Coinbase wanted to acquire them, Circle would agree in a heartbeat.” Another source added that the situation is fluid and subject to rapid change.

Despite these behind-the-scenes talks, Circle remains firmly committed to going public. The company formally filed its S-1 registration with the SEC in April, but details like the IPO’s terms and the launch of the investor roadshow are still pending. When reached for comment, Circle emphasized in an email to Fortune that “Circle is not for sale. Our long-term goals remain the same.” Meanwhile, both Coinbase and Ripple did not respond to requests for comment.

A Deepening Coinbase-Circle Relationship

The connection between Coinbase and Circle dates back to 2018 when they co-founded the Centre Consortium to issue USDC. That partnership formally concluded in 2023, with Coinbase acquiring an equity stake in Circle while Circle took full control over USDC’s governance. Notably, they continue to split the income generated from USDC reserves—a relationship heavily tilted in Coinbase’s favor.

According to Circle’s S-1 filing, the two firms equally divide residual revenue from the reserves backing USDC. However, Coinbase pockets 100% of the revenue when USDC is custodied directly on its platform, a trend that’s been on the rise, as reflected in Coinbase’s latest earnings reports. These reports show a noticeable boost in income derived from the USDC partnership, fueled partly by the expansion of the overall stablecoin market.

Beyond revenue sharing, the current agreement hands Coinbase significant influence over Circle’s operations. For example, Circle is barred from entering any new third-party deals that could affect Coinbase’s USDC revenue without prior approval. If Circle becomes insolvent, Coinbase would gain control over some of Circle’s intellectual property assets. For these reasons, many insiders view Coinbase as the most natural suitor for Circle, with one banking executive even joking, “It feels like they’re one company.”

Ripple’s Bid and Financial Firepower

Ripple, however, is no minor contender. Armed with a substantial war chest, Ripple reportedly offered between $4 billion and $5 billion to acquire Circle—a bid Circle ultimately declined, considering it undervalued the company. Bloomberg reported this in April and has since been independently verified by Fortune.

Ripple’s offer would likely combine XRP, the native cryptocurrency it developed, alongside cash. According to Ripple’s Q1 2025 XRP Markets Report, the firm holds about 4.56 billion XRP (valued at approximately $11.77 billion) and another 37.13 billion XRP ($95.7 billion) in escrow as of March 31.

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However, Coinbase can wield a more diversified arsenal, with $8 billion in cash on its balance sheet as of its March 31 10Q filing. As a publicly traded company, Coinbase may raise additional capital through debt issuance or stock offerings. One banker familiar with the situation commented that although Ripple’s balance sheet is “pretty meaningful,” Coinbase’s position as a public company gives it an edge in the eyes of many investors.

When questioned about the possibility of acquiring Circle, Coinbase CEO Brian Armstrong told Bloomberg on May 14 that he remains enthusiastic about Circle’s success. While the IPO does not impact the companies’ existing commercial relationship, Armstrong acknowledged that future deals remain open-ended, though there was “nothing to announce today.” Armstrong highlighted Coinbase’s cautious M&A strategy, noting that while they have the financial resources, the real challenge is integrating acquired companies.

IPO Momentum and Broader Market Context

Interestingly, Coinbase has been basking in market success, particularly after news broke that it would join the S&P 500 on May 19. That announcement propelled Coinbase shares to surge over 25% last week, although the stock remains below its December 52-week high of $349.75. By Monday afternoon, Coinbase was trading around $2