- Circle rejected Ripple’s $5B bid due to low valuation and illiquid equity offer.
- Ripple’s RLUSD stablecoin posed a strategic overlap with Circle’s USDC.
- Circle opted to retain its regulatory edge and pre-IPO momentum over merging.
Ripple’s move to take over Circle, the issuer of the second-largest stablecoin USDC, was allegedly stopped after the latter turned down a bid worth between $4 billion and $5 billion. The move would have reshaped the stablecoin view, merging two key players in digital payments. However, multiple strategic and financial factors led Circle to walk away from the deal.
Additionally, sources indicated that the proposal may not have consisted entirely of cash but included a portion of Ripple equity. Since Ripple is a privately held company, its shares are illiquid and not publicly traded, making it difficult to assign a concrete value to the equity portion of the offer.
Circle, which is preparing for a public listing, was not inclined to exchange its current position for equity that lacks market transparency. Its pre-IPO shares are reportedly trading at around $40 in secondary markets. Additionally, Circle had previously been valued at $9 billion during a failed SPAC deal in 2022 and raised capital at an $8 billion valuation in a Series F round the same year. With institutional investors like BlackRock and Fidelity backing the company, Circle remains financially stable and under no pressure to sell.
Strategic Conflict in the Stablecoin Sector
Ripple’s choice also had a possible strategic overlap. The company has now disclosed that RLUSD, a stablecoin that the company supplied, will appear on the XRP Ledger and Ethereum networks. With Circle, Ripple would have actively controlled USDC, which has a larger market share and is already integrated with regulators.
Analysts had said that if Ripple chose to acquire Circle, it would have gotten over the early adoption of RLUSD while benefiting from an ongoing liquidity channel. While this would have signed an agreement of cooperation, it also presented a conflict of interest, given that Circle may have seen the acquisition as anything but a partnership and more as one market being neutralized.
Regulatory Advantages and Institutional Integration
Circle’s USDC is used extensively by fintech services and mainstream financial platforms. Payment processors like Visa and Stripe accept it and are listed on Robinhood and other similar platforms. These integrations make Circle one of the only stablecoin issuers with regularly engaged regulators in the United States.
However, with the sale of Ripple, Ripple would acquire immediate access to this infrastructure. Still, sources said Circle was unprepared to give up its regulatory credibility and independence for a transaction without a clear cash value.
Ripple’s Other Acquisition and Industry Trends
Ripple’s last acquisition was of Hidden Road, a brokerage infrastructure company, for $1.25 billion, after its failed bid on Circle. The proposed deal will allow XRP and the XRP Ledger to be utilized in post-trade settlement processes. Ripple’s recent activity also comes on the heels of the resolution of its legal battle with the U.S. Securities and Exchange Commission, which CEO Brad Garlinghouse declared in March.
However, mergers and acquisitions are rising within the crypto industry. As investor sentiment improves, other firms, including Gemini, BitGo, and Bullish Global, are also gearing up for IPOs.
