In this article, we will discuss how did Circle double their valuation. In addition to operating as a financial technology firm, Circle is well known for backing the Center Consortium in 2018 alongside cryptocurrency exchange startup Coinbase. The consortium operates the USD crypto Coin (USDC).
How Did Circle Double Their Valuation?
US financial technology company Circle said on Thursday that its planned deal to list on Wall Street via a blank check company chaired by former Barclays chief Bob Diamond has doubled in value to $9bn.
The group, which runs the US dollar-pegged stablecoin USD Coin, announced it was pushing ahead with plans to combine with Concord Acquisition Corp and list on the New York Stock Exchange. This comes despite the collapse of a previous $415mn arrangement to fund the Spac deal, which had valued the combined company at $4.5bn.
The company said it would instead seek to list with new investors at a valuation between $7.65bn and $9bn, a substantial increase that it claimed reflected “improvements in Circle's financial outlook and competitive position”.
The technology group pointed to the growth of its digital currency, with more than twice the amount of USD Coin in circulation than when the initial Spac agreement was announced last July.
The deal is expected to close by December, with the company blaming “a variety of reasons outside the parties' control” for the inability to merge before the original closing date of April 2022.
Improvements of Stablecoins
Stablecoins are intended to be a bridge between traditional and digital money, and aim to help manage volatility during crypto market trading. They also are often used as collateral to make it easier for customers to buy other cryptocurrencies.
The amount of stablecoins in circulation has skyrocketed over the past year. According to crypto data site CoinGecko, the value of USD Coin in circulation rose from $4bn at the start of 2021 to $52bn, while Tether, the biggest stablecoin, rose from about $21bn to more than $78bn today.
But stablecoins have attracted growing regulatory pressure over concerns they post a mounting systemic risk. In November, a report by the President's Working Group on Financial Markets, made up of several US regulatory agencies, said legislation was “urgently needed”, arguing that operators ld be treated as banks.
Some crypto analysts have called into question the rigour of the so-called attestations that large stablecoin issuers publish to show the amount and types of assets held in their reserves.
USD Coin's reserves have faced scrutiny after it began to invest in what is described as “approved investments” as well as cash in 2020. Last August, Circle announced a move towards a conservative approach of holding only cash and short-term US government debt.
Bottom Line
In addition to a growing valuation and market share, Circle is expanding its team and is currently hiring for over 50 positions. This article explains about how did Circle double their valuation.
