Circle’s $5B Showdown: Will Coinbase Outbid Ripple After Rejected Offer?

Circle Internet Financial, the issuer of the USDC stablecoin, is reportedly in informal talks to sell itself to either Coinbase or Ripple, according to sources familiar with the matter. The discussions come just weeks after Circle filed publicly for its long-anticipated initial public offering (IPO) in early April.

Sources from the banking and private equity sector say Circle is seeking at least $5 billion, the same valuation it is targeting for the IPO. The company is still committed to going public, but the talks with Coinbase and Ripple suggest it is exploring multiple paths.

“If Coinbase wanted to buy them, Circle would sell in a heartbeat,” one banker said. Another source added, “Things change week by week.”

Ripple’s $5B Bid for Circle Rejected, Coinbase Seen as Stronger Suitor

Ripple has already made a bid in the range of $4 billion to $5 billion, but that offer was turned down as too low, according to Bloomberg.

The offer was likely a mix of cash and XRP, the cryptocurrency issued by Ripple. Ripple has a large balance sheet, including 4.56 billion XRP valued at around $11.77 billion, and another 37.13 billion XRP in escrow.

Coinbase, meanwhile, is seen as a more natural acquirer. The two companies share a long history through their joint venture, Centre Consortium, which launched USDC in 2018. Though the consortium dissolved in 2023, Coinbase retains an equity stake in Circle and continues to share in the USDC revenue.

Their agreement heavily favors Coinbase. According to Circle’s S-1 filing, Coinbase receives 50% of the residual revenue from USDC’s reserves, and 100% if USDC is held on its platform.

The arrangement also gives Coinbase approval rights over Circle’s USDC partnerships and partial control over its intellectual property in case of insolvency.

“I feel like they’re one company,” one source commented, describing the closeness of their operations.

As of March 31, Coinbase had $8 billion in cash, with options to raise more through debt or equity, indicating that its financially equipped for a deal.

Speaking with Bloomberg on May 14, Coinbase CEO Brian Armstrong said, “They’re going public doesn’t change anything about our commercial relationship.”

When asked about a possible acquisition, Armstrong responded, “Nothing to announce today,” but confirmed Coinbase is always open to M&A opportunities.

Circle, Coinbase, and Ripple have not commented publicly on the matter. While an IPO remains in play, a sale, especially to Coinbase, appears to be a serious possibility.

Coinbase and Ripple Strengthen Positions with Major Acquisitions as Circle’s IPO Ambitions Simmer

While Circle reportedly weighs acquisition talks with Coinbase and Ripple, both firms have been busy expanding their reach through high-profile deals.

Coinbase, now officially part of the S&P 500 as of May 19, has seen its shares jump over 25% in the past week. Trading at around $265, the company is valued at $56 billion, still below its December peak of $349.75. The listing adds momentum to Coinbase’s aggressive acquisition strategy.

Earlier this month, Coinbase confirmed the $2.9 billion acquisition of Deribit, the crypto options exchange boasting $30 billion in open interest. The deal, a mix of cash and stock, aims to make Coinbase a one-stop shop for derivatives, spot, and futures trading worldwide. Completion is expected by the end of 2025.

Ripple, too, has made bold moves. In April, it acquired prime brokerage firm Hidden Road for $1.25 billion, securing a foothold in TradFi infrastructure. With over $3 trillion cleared annually, Hidden Road positions Ripple as a serious institutional player.

Meanwhile, Circle’s IPO aspirations may find renewed optimism after eToro’s strong debut last week.

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