Circle Internet Financial’s Pre-IPO Valuation Reveals Strong Market Interest Despite Crypto Winter

Circle Internet Financial, the issuer of the USDC stablecoin, is trading its privately held stock in the secondary market at a valuation ranging between $5 billion and $5.25 billion, according to insiders. This activity comes ahead of a much-anticipated initial public offering (IPO), according to people familiar with the matter.

Circle, known for issuing USDC, the second-largest stablecoin by market cap, has permitted limited secondary market trading of its shares, although this is occurring on a selective basis. Two sources confirmed that these transactions are restricted to specific circumstances, mainly involving early-stage investors seeking liquidity or Circle employees looking to monetize their stock options before the IPO. Importantly, the company has mandated a minimum valuation threshold of $5 billion for these trades.

In 2022, Circle’s valuation soared to approximately $9 billion during an attempted public listing via a special purpose acquisition company (SPAC) merger with Concord Acquisition Corp. However, the proposed merger was mutually terminated in December 2022. This decision followed the U.S. Securities and Exchange Commission’s (SEC) failure to approve the deal in time, coupled with the destabilizing effects of the FTX collapse and the ensuing crypto winter.

Despite the noticeable drop from the 2022 valuation to the current secondary market-implied figure, one source emphasized that investors should not be overly concerned. The secondary market, where previously issued securities are traded, is currently subdued. Many investors are selling assets at lower prices to quickly raise cash, which has depressed market values, the insider explained.

Circle’s business metrics have shown robust growth. According to a January report titled “State of the USDC Economy,” the number of USDC wallets with at least $10 had increased by 59% over the previous year, reaching approximately 2.7 million. Moreover, transactions involving USDC hit 595 million by the end of November 2023.

Circle filed a confidential draft S-1 document with the SEC in January, marking its first step toward a public listing. Details regarding the number of shares to be offered and the price range are yet to be determined, and the exact timing of the IPO remains uncertain. Additionally, in a strategic move reported by Bloomberg in May, Circle plans to relocate its legal domicile from Ireland to the U.S. ahead of the IPO.

Speculation remains that Circle might still explore a reverse merger with a SPAC, though this possibility is yet to be confirmed. Should Circle successfully go public, it could pave the way for other stablecoin issuers to consider public listings, potentially transforming the landscape of the cryptocurrency market.

As Circle navigates the complexities of going public, its journey will be closely watched by industry stakeholders and investors alike, marking a significant chapter in the evolving narrative of digital finance.

Terry Jones
Digital Assets Desk