Ripple's Bold $5 Billion Offer to Acquire Circle and Its USDC Stablecoin Has Officially Fallen Through

Ripple's bold $5 billion offer to acquire Circle, the issuer of USDC, has officially fallen through — and now the crypto world is buzzing with speculation.

Despite reports of a $5 billion bid from Ripple to acquire Circle, the issuer of USDC, the deal has now officially fallen through.

While the move could have instantly positioned Ripple at the forefront of the stablecoin sector, it seems Circle wasn’t satisfied with the offer and saw no reason to accept it.

According to insiders at Jungle Inc, the main part of the offer was in illiquid Ripple shares, which may not have appealed to Circle as it prepares for an IPO.

Here’s a closer look at why the deal fell through and what it means for both crypto giants.

1. Illiquid Ripple Equity Offer

Insiders reveal that Circle wasn’t satisfied with Ripple’s offer and declined it, considering the valuation insufficient.

According to Jungle Inc, Ripple likely didn’t offer the full amount in cash. Instead, a significant portion of the $5 billion bid may have come in Ripple equity, shares that are currently private, illiquid, and hard to value.

For a company like Circle, already preparing for an IPO, trading its future for equity with uncertain market value wasn’t appealing.

Although Ripple hasn’t followed up with a new bid, it’s still eyeing a possible deal.

2. Ripple’s Competing Stablecoin

Announced earlier in July, Ripple is launching its own stablecoin, RLUSD, which will run on both the XRP Ledger and Ethereum.

As crypto analyst Stellar Rippler pointed out, this would make Circle a direct competitor, which begs the question of why they’d merge in the first place.

Circle may have seen the move as a play to quickly neutralize USDC and wasn’t ready to give up its lead in regulatory adoption and market trust. Especially as USDC is a fully-reserved, regulated stablecoin, meaning acquiring it would skip the slow adoption phase for RLUSD and instantly grant liquidity.

3. Circle’s Strong Pre-IPO Position

As shared by John Deaton, Circle is well-funded with strong backers like BlackRock (NYSE:BLK) and Fidelity, and its pre-IPO shares are currently trading around $40, with a target IPO valuation of $5 billion.

Earlier in 2022, Circle was valued at $9B in a SPAC deal that fell through, and the company also raised funds at $8B in its Series F round.

Given this position, Circle didn’t feel pressure to sell majorly since its stock remains in high demand on the secondary market.

4. Regulatory and Market Edge

Circle’s USDC is widely accepted in U.S. regulatory circles, with integrations across Visa (NYSE:V), Stripe, and Robinhood (NASDAQ:HOOD).

In a series of X post Stellar Rippler highlighted that Ripple could have instantly gained this infrastructure, but Circle wasn’s willing to trade it away, especially not for equity in a company launching a rival product.

5. Strategic Misalignment

Analysts suggest this wasn’t about competition, but consolidation.

Ripple was aiming to rapidly expand its position in the stablecoin sector by acquiring USDC’s network and reputation.

But as Stellar Rippler concluded, Circle saw more value in maintaining its independence rather than merging with a rival looking to reshape the market on its terms.

In short, Ripple aimed high, but Circle wasn’t ready to be absorbed.