Circle to Go Public: Cryptocurrency Firm SPAC Deal

Circle to Go Public via SPAC Merger

Circle, a prominent entity in the cryptocurrency space, has revealed its intentions to become a publicly traded company. This transition will be facilitated through a merger with Concord Acquisition Corp, a Special Purpose Acquisition Company, commonly known as a SPAC.

Circle is widely recognized as a key founding member of the Centre consortium, established in collaboration with Coinbase. Together with other industry partners, they are the issuers of USD Coin (USDC), a highly utilized stablecoin.

Understanding SPACs

A SPAC functions as a publicly listed company without any operational assets. Becoming publicly listed through a merger with a SPAC has emerged as a favored route for technology companies seeking to access public markets.

Financial Details of the Deal

Circle anticipates that the merger will result in a company valuation of $4.5 billion. Investors participating in the merger have pledged $415 million in Private Investment in Public Equity (PIPE) financing.

Furthermore, the company recently secured $440 million in capital funding. Should the merger proceed as planned, Circle will possess substantial financial resources.

Circle’s Evolution

Founded in 2013, Circle initially aimed to establish a mainstream payment platform centered around Bitcoin. However, the company subsequently shifted its focus towards developing a social payments application.

This resulted in Circle resembling a competitor to Venmo, incorporating underlying blockchain technology. Notably, the company even discontinued support for Bitcoin transactions at one point.

Early Vision of Circle

“We never thought of ourselves as a bitcoin startup. The media certainly classified us that way because we were involved with the technology. From the day we founded the company three years ago we’ve focused on trying to build a new consumer finance company. And one that makes money work the way the internet works,” stated Jeremy Allaire, Circle’s co-founder and CEO, in a 2016 interview with TechCrunch’s Natasha Lomas.

Pivots and Strategic Shifts

Although the initial consumer-focused strategy did not gain widespread traction, Allaire’s vision of programmatically managing money is noteworthy. In 2017 and 2018, the company underwent another strategic shift, concentrating its efforts on cryptocurrencies.

This included the launch of an over-the-counter trading desk catering to large cryptocurrency investors.

Expansion Through Acquisition and New Products

Circle acquired Poloniex, a leading cryptocurrency exchange within the U.S. market at the time. Additionally, they introduced Circle Invest, a user-friendly mobile application enabling the purchase and sale of select crypto assets.

The Rise of USDC

However, Circle’s most successful offering to date has been its stablecoin, USD Coin (USDC). As the name indicates, 1 USDC is consistently pegged to the value of 1 USD.

Unlike many other cryptocurrencies, USDC offers price stability, mitigating the risk of significant value fluctuations. Regular audits by independent firms verify that the amount of USD held in bank accounts corresponds to the circulating supply of USDC.

USDC Infrastructure and Growth

USDC simplifies the process of transferring funds between wallets through standard Application Programming Interface (API) calls. Circle has subsequently developed various infrastructure products centered around USDC, including Circle Accounts.

The company has also created on-ramps to facilitate the conversion between traditional currencies and cryptocurrencies.

Currently, there are $25 billion USDC in circulation, and Circle projects this figure to reach $190 billion by the end of 2023. The company intends to capitalize on the growing popularity of USDC to develop innovative financial services.