Big moves in crypto? Coinbase may be eyeing Circle

Coinbase May Acquire Circle Despite IPO Plans

As it prepares for an IPO, Fortune reports that the stablecoin issuer is now in discussions with Coinbase regarding a possible acquisition.

As part of an IPO attempt, Circle, the massive stablecoin issuer behind USDC, recently submitted documentation to authorities in April. It's also commonly known that Ripple, a cryptocurrency payments startup, was rejected when it attempted to buy Circle for as much as $5 billion. And now, the USDC issuer is once again in the news because of rumours of a Coinbase purchase.

COIN has $8B in cash and a history of aggressive M&A. Could this be its next move?  

The greatest deal of its kind in the sector, Coin, the biggest cryptocurrency exchange in the United States, recently completed the $2.9 billion acquisition of derivatives platform Deribit. However, the exchange still has a lot of cash on hand; over $8 billion in cash and cash equivalents are shown on its balance sheet. According to one of Fortune's sources, "Circle would sell in a heartbeat if Coin wanted to buy them."

The two already split USDC revenue 50/50, making a deal strategically logical. 

It wouldn't be shocking if Coinbase showed interest in CRCL. In addition to the exchange's existing equity position in the stablecoin issuer, the two companies have a revenue-sharing arrangement in which they divide stablecoin profits equally. USDC activities accounted for the majority of Coinbase's $698 million in Q1 "subscription and services" revenue. The business has often bragged about its prowess in mergers and acquisitions (M&A), asserting that it leads the sector. 

During Coin's Q1 earnings call in early May, Coin President and Chief Operating Officer Emilie Choi stated, "I think we've been the most active player in crypto M&A historically, period."

Rumors suggest Coinbase could acquire USDC issuer Circle, despite Circle’s IPO plans. 

The company seems that discussions have taken place despite Circle's insistence that the company is "not for sale." It remains to be seen if CRCL will go public or be acquired before then. However, Coinbase is most likely to be the buyer if an acquisition does occur.

When queried about the possible deal by Bloomberg, Coinbase CEO Brian Armstrong responded, "Their going public doesn't change anything about our commercial relationship." "However, that would obviously be up to them and us in terms of other deals we might consider in the future."

Now the question arises: Would a Coinbase-Circle Deal Change the Stablecoin Scene in Crypto? And if yes then Would a merger reshape stablecoins forever? 

There are big changes coming for the cryptocurrency market, especially for stablecoins, because there is talk about COIN possibly buying Circle. CRCL looks like a good choice since it is working on going public and already has a good deal for sharing revenue.Coinbase has a lot of money and experience in buying other companies, so it can probably make this deal happen. It's not clear if Circle will go public or be bought, but a merger could change things for USDC, the second-largest stablecoin. It's likely that there will be a big shake-up in the stablecoin market soon.