Circle, the US financial technology company behind USD Coin, has announced plans to list on Wall Street through a deal with a blank-cheque company chaired by former Barclays chief Bob Diamond.
The group said on Thursday it would combine with Concord Acquisition Corp and list on the New York Stock Exchange. The deal, which Circle said gave it an enterprise value of $4.5bn, is supported by some of Wall Street’s most prominent investors, including Marshall Wace, Cathie Wood’s Ark Investment Management and Daniel Loeb’s Third Point.
Circle runs the digital currency USD Coin, a stablecoin that is pegged to the US dollar. Stablecoins are intended to be a bridge between traditional and digital money, and aim to help curb volatility in crypto market prices. They also are often used as collateral to make it easier for customers to buy other cryptocurrencies.
Circle’s move underscores a trend this year for crypto-focused businesses to float on public equities markets. Coinbase, the exchange, debuted in New York in April while Bakkt, a cryptocurrency platform majority owned by Intercontinental Exchange, is also due to list following a combination with the Victory Park Capital acquisition vehicle. Its plan to list before July has been delayed.
The company said there were now more than $25bn worth of USD Coin in circulation, up more than 3,400 per cent this year. It said the stablecoin had backed more than $785bn of deals that were recorded on its blockchain.
“Circle is the true pioneer of trusted digital currencies, an increasingly critical part of the global financial system,” Diamond said.
But global regulators are increasingly worried that stablecoins — many of which are backed by reserves of hard currencies such as the US dollar — pose a mounting systemic risk. Boston Federal Reserve president Eric Rosengren warned last month that they would be a “concern” unless authorities moved to take control of the fast-growing market.
Some crypto analysts have called into question the rigour of the so-called attestations large issuers including Circle publish to show the amount and types of assets held in its reserves.
Jeremy Allaire, Circle’s chief executive, said on Twitter the group “intends to become the most public and transparent operator of full-reserve stablecoins in the market today”. He pledged the group would provide “a detailed summary” of USD Coin’s reserves.
In February, Tether, the biggest stablecoin, and a related trading platform Bitfinex vowed to offer more transparency on its reserves under the terms of an $18.5m settlement with the New York attorney-general’s office. The companies neither admitted nor denied wrongdoing.
Fitch, the credit rating agency, last week warned that a stampede to convert cryptocurrencies into traditional money could destabilise short-term credit markets. Both Tether and USD Coin say they hold billions of dollars worth of short-term conventional assets in their reserves.
Under the terms of the USD Coin listing deal announced on Thursday, Marshall Wace, Fidelity and Ark have committed to $415m of capital while Concord will bring $276m held in its account, largely from its IPO in December.
Circle is co-founded by Allaire, the internet entrepreneur previously behind the online video platform Brightcove. Diamond will join the board.
The deal is expected to close by the end of the year.