- Circle, the stablecoin issuer of USDC, is considering a potential acquisition by either Coinbase or Ripple, as reported by Fortune.
- Previously, Ripple’s bid of $4B-$5B was turned down by Circle.
Amid talks of a buyout, Circle may put its initial public offering (IPO) plans on hold, with a reported valuation target of at least $5 billion, as per Fortune.
Interestingly, Ripple’s similar $5B bid was rejected by Circle earlier, leading to speculation that higher bids may be on the table.
Coinbase’s Potential Advantage
According to Jeff Roberts, a crypto editor at Fortune Magazine, Coinbase may have an edge in the potential deal due to a contract between the two companies.
“Banker sources suggest that Coinbase is in discussions to acquire Circle, which seems likely given their existing contract. This contract grants Coinbase favorable terms, including veto rights over third-party deals.”
The contract in question originated in 2018 when Circle and Coinbase formed the Centre Consortium to launch the USDC stablecoin. When the collaboration ended in 2023, Coinbase acquired an equity stake in Circle.
Furthermore, a new distribution agreement entitles Coinbase to 50% of Circle’s USDC reserve revenues, as detailed in an S-1/A filing with the SEC.
“After accounting for other participants’ shares, Coinbase receives half of the remaining USDC reserve revenue.”
In recent years, Coinbase has benefited significantly from this arrangement, receiving substantial payments from Circle’s operations.
The report also highlights that the agreement extends beyond revenue sharing, giving Coinbase control over Circle’s intellectual property and restricting new third-party partnerships without Coinbase’s approval.
“These terms give Coinbase a strong position in any potential acquisition of Circle.”
Despite these developments, some in the crypto community have criticized Circle’s founder, Jeremy Allaire, for not matching the success of rival stablecoin issuer Tether, which reported a $13 billion net profit in 2024.