Market Analysis Report (06 Dec 2022)

Stablecoin issuer Circle has dropped its plan to go public in a $9 billion deal through a blank-cheque company chaired by former Barclays CEO Bob Diamond, Concord Acquisition. The deal would have made Circle one of a handful of publicly traded crypto firms.

Circle’s plan to go public via a Special Purpose Acquisition Company (SPAC) was first announced in July 2021. The process involves it merging with a shell company that has raised money to acquire it.

Concord had until December 10 to finalize the deal to buy Circle. The stablecoin issuer and its would-be SPAC partner described the move as a “mutual termination.” Circle’s CEO Jeremy Allaire said they were “disappointed the proposed transaction timed out,” but noted that “becoming [a] public company remains part of Circle’s core strategy to enhance trust and transparency.”

The announcement noted Circle is now a profitable company, after earning a net profit of $43 million in the third quarter of the year. Its profitability comes after a series of quarterly losses, partly influenced by write-downs related to its acquisition of Poloniex.

Circle benefits from rising interest rates, as the stablecoin issuer earns interest on the pools of reserves backing USDC, which it administers jointly with Coinbase.