Fortune has reported that cryptocurrency exchange Coinbase is interested in acquiring USDC stablecoin issuer Circle with a $5 billion pricetag, following Bloomberg’s April report that Ripple had made a $4-$5 billion bid that was rejected. Circle published its prospectus to list its stock on April 1, the day before President Trump announced comprehensive tariffs that shocked markets. This marks Circle’s second attempt to go public after abandoning a SPAC merger in 2022 following the collapse of FTX.
“If Coinbase wanted to buy them, Circle would sell in a heartbeat,” Fortune quoted an unnamed banker as saying. Circle responded to the magazine stating it was pursuing its IPO.
Meanwhile, Coinbase CEO Brian Armstrong recently told Bloomberg that Circle’s IPO wouldn’t affect its revenue sharing deal, discussing any future potential acquisition by saying, “in terms of other deals we might consider in the future, I mean, that, of course, would be up to them and us, but, you know, nothing to announce today.”
A complex partnership history
Coinbase and Circle have a long standing relationship, having jointly founded the Centre Consortium in 2018 to govern the USDC stablecoin. While Centre was later disbanded, the two companies maintained a revenue sharing agreement that has become financially significant for both firms.
This revenue sharing arrangement could potentially impact Circle’s IPO valuation. Coinbase receives a substantial portion of the interest income generated from the reserves backing USDC, which amounted to $910 million in revenue for Coinbase in 2024 alone. For Circle, this partnership represents both a strength in distribution and a weakness in weighing on its profit potential.
The acquisition battle between Coinbase and Ripple presents interesting strategic considerations. For Coinbase, acquiring Circle would secure an important revenue stream and strengthen its position in the stablecoin market. Coinbase has deeper financial resources, with approximately $8 billion in cash on its balance sheet, allowing it to structure a deal with a significant cash component. Plus its stock is a member of the S&P 500 which might be more attractive than the XRP cryptocurrency where the price is more volatile.
For Ripple, acquiring Circle would enhance its cross border payment capabilities, building on its existing infrastructure. Ripple’s strategic interest in stablecoins is evidenced by its own stablecoin plus recent partnerships that will enable FX, including with Societe Generale FORGE to issue EURCV on XRP Ledger and today’s announcement that StraitsX will issue a Singapore dollar stablecoin on the same platform.
However, Ripple faces financial constraints that Coinbase does not. Converting large amounts of XRP to fund an acquisition could negatively impact XRP’s price, as previously noted.
Timing considerations
Timing presents challenges for both potential acquirers, but more so for Coinbase. Ripple recently committed $1.25 billion to acquire Hidden Road, while Coinbase agreed to purchase Deribit for $2.9 billion. Additionally, Coinbase is managing fallout from a customer data breach that may require up to $400 million in compensation costs.
These concurrent developments raise questions about management bandwidth and financial capacity for either company to pursue another major acquisition. For Circle, the timing of its IPO attempt amid market volatility presents its own challenges, potentially making an acquisition offer more attractive if the public listing faces headwinds.
As the situation develops, the outcome will significantly impact the stablecoin market, particularly USDC’s position as the second largest stablecoin by market capitalization. Whether Circle remains independent or joins forces with either Coinbase or Ripple will shape the competitive landscape in the rapidly evolving digital asset ecosystem.
