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27 July 2021

Circle IPO further legitimizes crypto before regulators, outsiders

Circle IPO further legitimizes crypto before regulators, outsiders


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Gotthard Fund Management AG, noted to Cointelegraph that Circle, the principal operator of USD Coin (USDC), the second-largest stablecoin by volume, “has been around since 2014, and this is another example of an established player being rewarded for their input into the ecosystem.”.

The overall crypto market may be moving sideways lately, but Circle has clearly been moving forward, closing the gap with stablecoin market leader Tether (USDT), which in February reached an $18.5-million settlement with New York State’s Attorney General for misrepresenting the degree to which USDT was backed by fiat collateral.

Vishnevskiy noted, “USDC has gained market share from 14.3% to 23.5%, and now that it is going public it is highly likely that this market share will increase further, as Circle will have to disclose the assets that back this USDC stablecoin to the regulators.”.

But Circle, unlike many crypto firms, has mostly welcomed regulation — as did the crypto public offering pioneer Coinbase.

Another attraction “is the ability for the SPAC to inject capital to the company,” said Lau, while David Trainer, CEO of investment research firm New Constructs, told Cointelegraph, “Perhaps, the Circle folks thought that not enough people would understand their business.”.

“The timing may seem a bit off, however, this is something I am sure that was looked at by the company and its advisors when making the decision,” said Vishnevskiy, who called the recent market weakness a short-term phenomenon.

Amid China’s cryptocurrency crackdown, souring investor sentiment and the United States Federal Reserve chairman blasting stablecoins, there hasn’t been much to cheer about on the crypto front lately, but Circle Internet Financial’s initial public offering announcement in mid-July showed that a crypto startup was still capable of attracting billions of dollars in fresh investments.

“Circle didn’t come across as a company that would go public imminently

All in all, “the [crypto] market may have cooled, but there is still a lot of hot money out there, and blockchain remains a hot topic,” Vishnevskiy said, while Stephen McKeon, a finance professor at the University of Oregon and a partner at Collab+Currency, told Cointelegraph, “the Circle transaction provides further validation of the market for stablecoins and, importantly, the market for services built on top of these assets.”

“Overall, I would regard this event as a further legitimization of the industry in the eyes of the regulators and outside observers,” summarized Vishnevskiy, adding that it is “significant considering the global regulatory crackdown and pressure we have witnessed over the last few months.”

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