Stablecoin issuer's SPAC deal value doubles to US$9b

[SINGAPORE] Circle Internet Financial, the issuer of the cryptocurrency USDC stablecoin, said the terms of its planned merger with special purpose acquisition company (SPAC) Concord Acquisition have changed and the value of the transaction has doubled to US$9 billion.

The increase comes after "material improvements in Circle's financial outlook and competitive position" including the growth and market share of the USDC stablecoin, Boston-based Circle said in a statement Thursday (Feb 17). USD Coin, which is currently the fifth-biggest cryptocurrency, has a market value of more than US$52 billion, according to CoinGecko, compared with about US$25 billion when the agreement was first announced in July.

Stablecoins are cryptocurrencies that aim to peg their value to something, usually the US dollar, and are often used by online exchanges to facilitate transactions.

The revised agreement has been approved by the boards of both Concord and Circle. Bob Diamond, the former head of Barclays, is the chairman of Concord.

"Circle is one of the most interesting, innovative and exciting companies in the evolution of global finance and will have a historic impact on the global economic system," Diamond said in the statement issued by Circle.

The new deal replaces the prior business combination agreement and moves the initial outside date to Dec 8, 2022, according to a Securities and Exchange Commission filing Thursday. Upon closing of the transaction, current shareholders of Concord will exchange their shares of Concord common stock for equity of the company.

The modified deal comes at a time when signs of trouble are popping up among SPAC mergers. Many are falling apart entirely. At the same time, blank-cheque companies with tens of billions of dollars set aside for takeovers are still seeking targets, potentially creating a situation where attractive targets might have their choice of partners.

Crypto firms present something of a wild card for any potential partner, especially on the regulatory front. The US government has expressed concern about many aspects of digital assets, with stablecoins and their potential systemic risks among the biggest. The crypto industry is gearing up for policy battles in Washington, as numerous officials express reservations about everything from volatility to effects of the pegs for stablecoins.

Still, according to Circle, things are headed in a positive direction for crypto and the company.

"This is being acknowledged by the White House as a critical area that's going to play a major role in the growth of the dollar and the dollar on the Internet," said Jeremy Allaire, CEO of Circle, in a video interview on Thursday. "We've gotten clarity that the federal government wants to ensure that well-run clearly defined rules around large-scale dollar stablecoin issuers like Circle is actually a critically important thing." BLOOMBERG