main conclusions
Circle, the issuer of USDC, has canceled a plan to go public in a $9 billion deal Public listing could have featured USDC as the anti-Tether, in a fully transparent and audited model Overall Circle remains determined to eventually go public, but in the meantime will continue to fight the stablecoin war against rivals Binance, has become a major driver after withdrawing USDC and other exchange rivals in order to boost its own stablecoin, BUSD Stablecoin group Circle has abandoned plans to go public. USDC issuer, stablecoin with a market cap of $43 billion, Circle, planned to go public at a valuation of $9 billion. Sam Bankman-Fried and the crypto markets had other ideas, however.
Abandoned plan means crypto collapse
The collapse of the deal shows just how far crypto has fallen. The deal was initially closed in July 2021, with Circle planning to go public through a blank check company headed by Bob Diamond, a former Barclays executive. “We are disappointed that the proposed transaction has expired; however, going public remains part of Circle’s core strategy to increase trust and transparency, which has never been more important,” said Jeremy Allaire, CEO of Circle. It’s not a surprise. Deals to go public have been shelved across the market – not just crypto – as interest rate hikes have sent prices crashing across all sectors. Look no further than Coinbase for evidence of the damage, with its stock down 84% in 2022 (I wrote a review of its demise here).
Public safety desirable for stablecoins
The stablecoin space has been hit harder than most this year. There was the high profile collapse of UST in May, bringing much of the ecosystem down with it. DAI is struggling heavily, in the curious position of being a decentralized stablecoin that is very centralized (given its USDC holdings). His latest plan is to ditch the peg model altogether, switching to a floating stablecoin, which strikes me as a complete paradox, if you ask me. But it’s the continued speculation about the safety of Tether (reviewed here), which broke down to 95 cents on several exchanges after the UST collapse, that remains the biggest complaint about stablecoins. This is where USDC could have really benefited from Circle going public. The security, disclosure and transparency required by a publicly traded company are unmatched. The move would have massively benefited Cicle’s image, especially compared to its biggest rival, Tether. It really could have positioned itself as anti-Tether, a fully public and therefore audited, transparent and secure stablecoin. The biggest winner in this business collapse news, therefore, is undoubtedly Tether.
The stablecoin war continues
Circle is expected to go public eventually. I’m sure it does, but that could take a while, looking at the state of the markets, with inflation yet to cool significantly and the world economy struggling as Europe and the US plunge deeper into winter amid a stifling energy crisis. Until then, it will continue to fight its rivals for market dominance. The most recent winner in all of this is Binance’s stablecoin BUSD, after the exchange delisted USDC and several other competitors from its exchange. The USDC should have the ace of a public listing up its sleeve. But now that that has been cancelled, it’s back to the drawing board as far as the stablecoin wars are concerned.
