FinTech

The scaleup behind stablecoin USDC has agreed a $4.5 billion SPAC merger which will see it float on the New York Stock Exchange. 

Circle co-founder Jeremy Allaire will remain CEO of the company while former Barclays Chief Executive Bob Diamond, Chairman of Concord Acquisition Corp – specially created for the deal – and CEO of Atlas Merchant Capital, will join the board. 

The transaction, which will see a new Irish holding company acquire both Concord and Circle, is anticipated to close in the fourth quarter of this year. 

Circle runs USD Coin, whose price is tied 1:1 to the US dollar. The Centre Consortium – founded by a partnership between Circle and crypto exchange Coinbase – holds the dollar equivalent of every unit of the cryptocurrency in reserve, either cash or short-term US Treasury bonds.  

Launched in 2018, its goal is to be accepted widely for digital transactions without the fear of sharp increases and decreases in value, as is the case with many digital currencies. To date, it has backed $785 billion in deals recorded on its Ethereum-based blockchain. 

In a similar way to fellow stablecoin Tether, USDC also serves as a place where crypto investors can shelter from the extreme volatility of other cryptocurrencies by trading their holdings for USDC but not cashing out into fiat currencies such as the US dollar. 

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Circle will go public through a business combination with Concord Acquisition Corp, a publicly-traded special purpose acquisition corporation with $276 million in trust. 

Upon completion of the transaction, existing Circle shareholders will maintain approximately 86% ownership of the public entity. 

Investors – including Marshall Wace LLP, Fidelity Management & Research Company LLC, Adage Capital Management LP, accounts advised by ARK Investment Management LLC and Third Point – have committed $415m in PIPE financing ahead of the deal, which when combined with cash in trust and Circle’s recently closed convertible note financing, will provide Circle with over $1.1b in gross proceeds. 

Unlike Bitcoin, there is no limit on the amount of USDC which can be created. It has grown to more than $25bn in circulation, a 3,400% increase this year. 

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“Circle was founded with a mission to transform the global economic system through the power of digital currencies and the open internet,” said Allaire.  

“We’ve made huge strides towards realizing this vision, and through this strategic transaction and ultimate public debut, we are taking an even bigger step forward, with the capital and relationships needed to build a global-scale internet financial services company that can help businesses everywhere to connect into a more open, inclusive and effective global economic system.  

“We are thrilled to partner with Concord’s executive and investment team, drawing on their decades of operating experience growing financial services businesses around the world.” 

Diamond added: “Circle is the true pioneer of trusted digital currencies, an increasingly critical part of the global financial system.  

“The firm has earned its exceptionally strong reputation building highly innovative blockchain-enabled products and services within the regulatory perimeter.  

“Circle’s world-class leadership team, its track record of delivery, and extraordinary ambition help position the firm as one of the most exciting companies in the transformation of finance.”