- Coinbase-Circle merger risks centralizing USDC control via IP clauses, sparking regulatory and market dominance concerns amid Tether’s 69% share.
- Ripple’s $5B offer rebuffed; Coinbase’s contractual edge may redefine stablecoin dynamics, challenging Tether’s $160B market stronghold.
Coinbase is negotiating a potential acquisition of Circle, the issuer of the USDC stablecoin, according to a Fortune report citing banking sources. The deal could reshape the stablecoin market, as Circle reportedly paused its initial public offering (IPO) plans to explore buyout options. Ripple, another suitor, previously offered $5 billion for Circle but was rejected, with insiders suggesting the firm seeks a higher valuation.
Coinbase’s Strategic Leverage
Coinbase holds unique advantages in the negotiations due to a longstanding partnership with Circle. In 2018, the companies co-founded the Centre Consortium to manage USDC, granting Coinbase veto power over third-party deals involving the stablecoin. A 2023 revenue-sharing agreement further entitles Coinbase to 50% of Circle’s USDC reserve income after payments to other partners.
Banker sources say Coinbase in talks to buy Circle—a likely outcome IMO given the contract between them
That contract gives COIN sweet terms like veto rights over 3rd party deals
And/but: the IPO market is looking up post-eToro so Circle has leveragehttps://t.co/f8jHFNjzpA
— Jeff Roberts (@jeffjohnroberts) May 19, 2025
Financial disclosures reveal Coinbase earned $907 million from this arrangement in 2024, dwarfing Circle’s net income of $155 million the same year. The terms also grant Coinbase partial control over Circle’s intellectual property if the firm faces insolvency, effectively limiting Circle’s ability to form new partnerships without Coinbase’s approval.
Ripple’s rejected $5 billion bid underscores competitive tensions in the stablecoin sector. Circle, the second-largest stablecoin issuer behind Tether (USDT), trails significantly in profitability. Tether reported $13 billion in net income for 2024, while Circle’s revenue reached $1.6 billion with narrower margins. Critics argue Circle’s reliance on Coinbase’s distribution channels has stifled its growth compared to rivals.
Imagine running a $60 billion stablecoin in such an incompetent way you can't even turn a decent profit and desperately have to sell.https://t.co/2i64fwLz8J
— WhalePanda (@WhalePanda) May 19, 2025
Some crypto community members have criticized Circle founder Jeremy Allaire for failing to capitalize on USDC’s early lead. USDC’s market share has stagnated at 22%, while Tether commands 69% of the $160 billion stablecoin market.
A Coinbase acquisition could streamline operations but risks further centralizing control over USDC, which positions itself as a regulated alternative to USDT.
