Circle doubles reverse merger valuation to $9bn

Circle, the US-based blockchain payment platform developer that counts corporates FTX, Baidu, Bitmain, CreditEase and Wanxiang as investors, revised the terms of its reverse merger yesterday to double its valuation to $9bn.

The company had agreed in July 2021 to merge with special purpose acquisition company Concord Acquisition Corp at a $4.5bn valuation and take its listing on the New York Stock Exchange.

Founded in 2013, Circle provides a payment processing service which uses a regulated dollar digital currency called USD Coin, the circulation of which has doubled since the July agreement, reaching over $52bn this week.

The company cited a better financial outlook and competitive position for the decision together with the increased circulation accounts. The holding company formed through the original agreement will take over both Circle and Concord Acquisition Corp.

The same month the reverse merger was announced, payment services provider Mastercard announced it is working with Circle, blockchain payment and trading platform devloper Paxos Trust Company and financial services provider Evolve Bank & Trust to enable more banks and crypto companies to offer a card to use digital currencies wherever Mastercard is accepted.

Stablecoins like Circle’s USD Coin are less volatile than other cryptocurrencies as their value is tied to an outside asset, in this case the US Dollar, making them somewhat of a bridge between cryptocurrencies and more traditional assets.

In theory, stablecoins should have more leeway on the regulatory front, but obtaining the approval of the US Securities and Exchange Commission for the merger has taken longer than expected. The same interconnectedness that stablecoins may bring between digital and traditional currencies has made regulators take a harder look at potential systemic risk.

Regulatory issues made an expected date of April 2022 untenable for the completion of the transaction, but the new terms will give the companies until December this year to close the deal, with the option to extend until the end of January 2023 under certain circumstances.

Circle’s chief executive, Jeremy Allaire, said: “Circle has made massive strides toward transforming the global economic system through the power of digital currencies and the open internet.

“Being a public company will further strengthen trust and confidence in Circle and is a critical milestone as we continue our mission to build a more inclusive financial ecosystem. Making this journey with Concord under our new agreement is a strategic accelerator.”

Since July, the company has remained active in its investment activity. It launched a corporate venturing vehicle called Circle Ventures in November to back early-stage developers of blockchain technology.

More recently, Circle was among the limited partners for the $70m inaugural fund closed by Taiwan-based venture capital firm Infinity Ventures Crypto earlier this month, alongside digital entertainment and blockchain technology developer Animoca Brands.