The crypto firm Ripple has made a takeover proposal for rival stablecoin issuer Circle, the company behind USD Coin (USDC), offering between 4 billion USD and 5 billion USD. However, the offer was reportedly rejected as too low.
Ripple remains interested in Circle, but has not yet decided whether to submit a new offer, according to Bloomberg, citing insider sources. Circle, meanwhile, is focusing on its IPO, which it filed for earlier this month. The stablecoin provider had previously planned to go public via a merger with a special purpose acquisition company (SPAC) at a 9 billion USD valuation. However, that deal was canceled at the end of 2022.
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Ripple targets the stablecoin market
Circle operates the second-largest stablecoin by market capitalization. This cryptocurrency is pegged 1:1 to the US dollar. To maintain this peg, Circle backs each coin with a dollar in US Treasuries or cash equivalents. The current interest rate of around 4% per year flows into the issuer’s pockets. With a USDC market capitalization of 62 billion USD, Circle generated 1.7 billion USD in revenue last year.
Ripple is also aiming to enter this market. Founded in 2012, the company initially set out to enable low-cost, cross-border transactions. It sought to distinguish itself from Bitcoin with a more scalable solution. The network is based on the cryptocurrency XRP, formerly also called “Ripple.” However, Ripple has struggled in recent years to establish XRP as a means of payment. Instead, the company is now betting on stablecoins. In October 2024, Ripple launched RLUSD, which now holds a market value of 316 million USD.
Focus on m&a
Distributing its own stablecoin may have proven more challenging than Ripple originally expected. However, due to monthly vesting of XRP tokens, the company has substantial financial resources. According to its Q4 market report, Ripple held 4.4 billion XRP at the end of last year, with a current value of 9.7 billion USD. A vesting contract unlocks an additional 1 billion XRP (2.2 billion USD) each month, of which Ripple typically locks 80% back into the smart contract.
Ripple is now using these funds for strategic acquisitions. In spring 2023, Ripple acquired Swiss crypto infrastructure provider Metaco for 250 million USD. A few weeks ago, the company also acquired prime broker Hidden Road for 1.25 billion USD. It remains unclear whether Ripple is financing these acquisitions through XRP sales or pledges. However, it appears the company intends to continue its aggressive acquisition strategy.
