Those unknowns make Circle’s worth anything but stable. Back in February there was $53 billion of its USD Coin in circulation, and the company was targeting $220 billion by the end of 2023. But now there’s only $43 billion. It’s a critical input for Circle’s value. The company takes customers’ money, hands them a dollar's worth of stablecoin and puts the real-world money in safe places like bank accounts and Treasury bonds, whose yields comprise the bulk of its revenue.
Circle’s boss Allaire may get a second crack at going public if these issues are settled. Until then, his stablecoin reserves ought to be earning a reasonable return – even if they’re shrinking. Circle holdsin short-dated Treasury bonds that might yield around 4.5%. Even if it shares a third of those proceeds with exchanges that trade USD Coin, it should still be making $1 billion in revenue a year – twice its estimate of annual operating costs from February.
Concord, a listed special-purpose acquisition company chaired by former Barclays chief Bob Diamond, agreed to buy Circle in July 2021. It reset the terms of the deal in February 2022, raising Circle’s implied valuation to $9 billion from $4.5 billion.
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