Stablecoin-maker Circle SPAC’d for $4.5 billion

You could say Circle is on a roll.

Yesterday, the crypto financial services company announced plans to go public via SPAC at a $4.5 billion valuation. In May, it made history with the largest crypto-related investment round ever recorded. And four years ago, it partnered with Coinbase to release USD Coin (USDC), which is now the world’s second-most popular stablecoin.

Quick recap: Stablecoins are cryptocurrencies aimed at minimizing price volatility relative to a “stable” asset, like fiat currency. To some, that price stability makes them more attractive for use as currency—peer-to-peer payments, e-commerce, and ways to avoid credit cards and money transfer fees.

In the world of stablecoins, USDC is second only to Tether (USDT). Both are pegged to the US dollar in a 1:1 ratio—e.g., if you own one, you should be able to redeem it for $1 in USD at any time.

But, but, but: Though Tether has a market cap of ~$64 billion, compared to USDC’s ~$26 billion, some consider USDC a safer option. After a 22-month probe, the New York attorney general found that the company behind Tether overstated its USD cash reserves—and fined it $18.5 million.

Looking ahead: In its investor presentation, Circle projected that USDC’s circulation will reach $190 billion—a sevenfold increase—in the next two years.—HF