USDC Issuer Circle Scraps Its SPAC Deal and Plans to Go Public

UTC by Bhushan Akolkar · 3 min read
USDC Issuer Circle Scraps Its SPAC Deal and Plans to Go Public
Photo: International Monetary Fund / Flickr

Amid the current crypto winter and overall bearish sentiment, stablecoin issuer Circle decided not to pursue any further SPAC merge plans for going public.

On Monday, December 5, Circle Internet Financial, the issuer of the world’s second-largest crypto stablecoin, USDC, announced the scrapping of its plans for a SPAC merger with Concord Acquisition Corp. The boards of both companies confirmed the same.

With a valuation of $4.5 billion, Circle issued its plans to go public for the first time in July 2021. When Circle amended its terms with Concord earlier this year in February, it literally doubled the valuations.

However, amid the current bearish sentiment for risky bets and growing regulatory scrutiny, Circle is not willing to further pursue its public listing ambitions. Earlier this year, Circle’s native stablecoin USDC had a valuation of $52 billion. However, these numbers have dropped to around US$43.4 billion.

The crypto winter of 2022 and collapsing crypto prices have likely led Circle to pull out of the SPAC. Amid several defaults and bankruptcies, the reputation of the crypto industry is moving south. The recent collapse of giants like crypto exchange FTX has done further damage to the investors’ sentiment. With the odds clearly not in their favor, it could probably be the right move for Circle at this point in time.

In a Twitter post, Circle CEO Jeremy Allaire also said that the firm didn’t complete the US Securities and Exchange Commission‘s “qualification in time”. He further added:

“We are disappointed the proposed transaction timed out, however, becoming a public company remains part of Circle’s core strategy to enhance trust and transparency, which has never been more important. While there are a lot of challenges within the crypto and blockchain industry, I am of the very firm conviction that we are going to decisively leave the speculative value phase and enter the utility value phase, and stablecoins such as USDC will play a huge part”.

The Fall in SPAC Mergers

During last year’s bull run in the US equities as well as the crypto market, special purpose acquisition companies (SPACs) mergers were quite popular in the market. However, the bearish market sentiment of 2022 has dampened the demand.

Circle is not the first crypto firm to terminate its merger plans. Earlier, private firms such as Bitcoin miner Prime Blockchain and investing app Acorns Grow also called off their merger plans. This year alone, more than 56 SPAC mergers have been called off.

Speaking of the development on Monday, Bob Diamond, chairman of Concord and former chief executive officer of Barclays, said that he remains confident in Circle’s future growth and blockchain’s ability to disrupt financial services.

He also stressed that a regulatory-first approach will be key to building trust between crypto and the financial sector.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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