Stablecoin issuer Circle targets $7.2 billion valuation in upsized U.S. IPO

An advertisement for the cryptocurrency, Bitcoin, is displayed on a building in Hong Kong on Nov. 18, 2021. (AP Photo/Kin Cheung, File)

Crypto firm Circle Internet said on Monday it was targeting a valuation of up to $7.2 billion on a fully diluted basis in its upsized initial public offering in the United States, underscoring growing momentum in the stablecoin market.

The upsized IPO indicates strong investor appetite for crypto firms under U.S. President Donald Trump, who has not only promised friendlier regulations for the sector, but also has several crypto projects associated with him.

New York-based stablecoin issuer Circle and some existing investors are now looking to raise up to $896 million from 32 million shares priced between $27 and $28 apiece, up from their earlier offer of 24 million shares between $24 and $26.

Circle’s dollar-denominated USDC, the second-largest stablecoin in the world, is expected to benefit from the impending stablecoin bill, which is expected to catalyze institutional adoption.

Stablecoins are designed to maintain a constant value, usually a 1:1 dollar peg, and are commonly used by crypto traders to move funds between tokens.

Circle’s reserve income, its primary revenue source, from interest on the Treasuries backing its USDC coin, rose 55.1 per cent to $557.9 million in the quarter ended March 31.

But distribution and transaction costs for the period jumped 68.2 per cent, outpacing revenue growth for Circle, which distributes USDC primarily via its partnership with Coinbase and other third-party distributors.

J.P. Morgan, Citigroup and Goldman Sachs are the lead underwriters for the offering. Circle will list on the New York Stock Exchange under the symbol “CRCL.”

Circle is poised to go public in New York later this week.

(Reporting by Arasu Kannagi Basil and Ateev Bhandari in Bengaluru; Editing by Shinjini Ganguli)