Circle Moves to US, Prepares for Public Listing Amid Stablecoin Market Stall and Regulatory Uncertainty

Circle, the creator of the second-largest stablecoin, USDC, is planning to relocate to the United States before potentially going public there. The firm, which recently submitted court documents for the move, is currently headquartered in the Republic of Ireland. Circle announced its intention to list shares publicly in the US in January, having previously been based in Ireland. The decision to shift legal residency comes at a time when other major cryptocurrency companies, including Coinbase, are facing legal action from the US Securities and Exchange Commission (SEC), which claims they operate unlicensed exchanges selling securities. USDC has a market capitalisation of approximately $33bn, behind only Tether’s USDT with $100bn, according to CoinMarketCap data. Circle did not respond to requests for further comment. This news follows reports that the expansion of stablecoins, which traditionally aim to maintain a fixed value against fiat currencies like the dollar, has stalled. The combined market capitalisations of the top three stablecoins – USDC, USD Coin (USDC) and Dai (DAI) – has remained around $149bn to $150bn for the past three weeks. Some stablecoins, however, do not fully back their reserves, resulting in serious losses in some instances. The popular algorithmic stablecoin UST, for example, collapsed dramatically earlier this year, removing billions from the market. At the same time, DAI, which over-collateralises its reserves with cryptocurrencies, has survived multiple market collapses. Other developments in the sector include the launch of a new stablecoin by DeFi lender Liquity, which allows users to set borrowing rates in its white paper, as well as the introduction of stablecoins by decentralised finance platforms Aave and Curve last year, as well as Etherean Synthetic Dollar (USDe) by Ethernaut, which generates yield by gathering Bitcoin and ETH futures premiums using a “carry trade” strategy. The move by Circle, however, follows a recent slump in the value of bitcoin, with analyst Mike McGlone suggesting that the cryptocurrency could fall to $55,000 or less in the near future, while Ether (ETH), the second-largest cryptocurrency by market capitalisation, may fall to $2,500. This news comes at a time when inflows into US-listed cryptocurrency exchange-traded funds (ETFs) have slowed significantly, following a surge in the run-up to the halving of Bitcoin mining rewards on April 20th. Since November 2021, the share price of Coinbase Global, the largest US cryptocurrency exchange, has fallen by 38%. However, the company recently revealed its second consecutive quarterly profit, with net income rising to $1.17bn during the first quarter of 2024, compared to $6.4m during Q1 2023. Net revenues also rose by 155% when compared to the same period of 2023. Circle’s CEO, Jeremy Allaire, has forecast that the “digital asset ecosystem” will eventually become a mainstream financial system, with the technology industry playing a critical role in building that system.