Circle To Go Public in Q4 at $4.5B Valuation

DeFi’s most popular stablecoin issuer is going public.

Circle, which issues the USDC stablecoin, announced its plans yesterday to go public in Q4 of this year through a special purpose acquisition company (SPAC). The deal will happen with Concord Acquisition Corp. and Circle will trade under the ticker symbol CRCL with the transaction valuing the company at $4.5B.

“Circle going public is powerful for the industry as a whole as it brings USDC to the same playing field as current payment dominants like Visa, Mastercard and PayPal,” Jack Lipstone of Rari Capital told The Defiant. One of Rari’s main products is a pool which generates yield on USDC deposits. Lipstone added that Circle “has built groundbreaking technology with USDC and is developing product market fit through cash back on the Coinbase credit card [and] the recently announced DeFi API providing institutions access to decentralized protocols.”

In the investor presentation, Circle compared the cryptocurrency market at $2T with overall M2, the measurement of money supply typically used to forecast inflation, at $130T. The presentation called this gap a “massive market opportunity expected to play out over decades.” The company provides auxiliary services built around USDC, including business accounts which operate using Circle’s APIs.

DeFi’s stablecoin

There is currently $25.9B of USDC in circulation, which is second only to Tether (USDT) among stablecoins. Tether has $64.3B in circulation. In contrast with Tether however, 47% of the USDC supply is locked in smart contracts, according to Glassnode, relative to just 19% for USDT. 

Interacting with DeFi protocols requires locking assets in smart contracts. The discrepancy between USDC and Tether locked up underlines USDC’s dominance in open finance. The asset has seen tremendous parallel growth with DeFi, with supply increasing by over 520% on the year as demand for USDC has risen, according to The Block. 

More transparency

Circle CEO Jeremy Allaire took to Twitter to say that the company’s transition to the public markets “creates an opportunity for Circle to also provide significantly more transparency about the business we are building around USDC and about the reserves that back USDC.”

The statement comes with the backdrop of criticism around a lack of transparency regarding the reserves which back Circle’s USDC. The digital asset is fully backed 1:1 by U.S. dollars, according to the company’s website. Though what Circle does with those reserves is unclear — an April 14, 2020 report said the U.S. dollar reserves are held at “U.S. federally insured depository institutions and in approved investments.” 

Regardless, Circle’s public listing shows the deepening penetration of a core component of DeFi in USDC.