Circle is reportedly in talks to sell to Coinbase or Ripple despite IPO plans. Coinbase holds strong control and financial leverage over Circle. Ripple’s $5B bid was rejected amid higher IPO valuation targets.

Despite having filed for an initial public offering (IPO) last month, Circle Internet Financial, the company behind the USDC stablecoin, is reportedly engaged in discussions of a possible sale to either Coinbase Global or Ripple, as per a Fortune report, citing sources familiar with the matter.

While Circle remains committed to its IPO, it has not yet scheduled a roadshow or disclosed specific terms.

The company is believed to be targeting a valuation of at least $5 billion, whether through public markets or via a strategic buyout.

Behind the scenes, conversations with both Coinbase and Ripple about potential sales have reportedly gained momentum, pointing to the dual-track approach Circle appears to be pursuing.

Coinbase has emerged as the more likely acquirer, largely due to its close commercial ties with Circle and its influence over the governance of USDC.

The two companies co-founded the Centre Consortium in 2018 to launch the dollar-backed stablecoin, and although Centre was dissolved in 2023, the partnership’s legacy endures.

Following the consortium’s conclusion, Coinbase acquired an equity stake in Circle and retained significant operational leverage over the stablecoin issuer.

According to insiders, Coinbase’s influence over Circle includes rights related to insolvency scenarios and approval authority over any major distribution or partnership deals involving USDC revenue.

These terms, embedded in the existing agreement, suggest that Coinbase holds considerable sway over Circle’s strategic direction.

As a result, many in the industry believe Coinbase is the most logical buyer, especially considering its strong balance sheet and deep integration with Circle’s operations.

Financially, Coinbase is well-positioned to pursue such an acquisition.

With approximately $8 billion in cash reserves and the capacity to raise additional capital through public markets, the exchange has the firepower to make a competitive offer.

Additionally, Coinbase currently benefits from receiving 100% of the revenue generated by USDC held on its platform, making a full acquisition a potentially lucrative long-term move.

Ripple, on the other hand, is not out of the picture. Backed by a vast reserve of XRP tokens, valued at over $100 billion when including assets held in escrow, Ripple reportedly made an acquisition offer in the range of $4 billion to $5 billion.

However, that bid was ultimately turned down by Circle, which is aiming for a higher valuation.

Despite the rejection, Ripple’s strong capital reserves mean it could remain a contender should the terms become more favourable.

As Circle weighs its options, the decision will likely hinge on market conditions, investor appetite, and the comparative benefits of a public offering versus a private sale.

While the recent success of eToro’s public debut may offer encouragement for a Circle IPO, the strategic synergies of a sale, particularly to Coinbase, could prove too compelling to ignore.

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