By Nathan Ferguson
As per an exclusive press release, Circle (the entity responsible for issuing USDC stablecoin) declared the merger contract with Concord Acquisition Corp. The decision has been taken with the consent of the board of directors of both platforms.
Circle and Concord Together Dismiss the Business Merger
The contract was declared in July of the previous year with $4.5B as its preliminary valuation and was modified later on in February this year when the valuation of Circle inflated to $9B. At present, USDC occupies 2nd place among the biggest stablecoins in terms of circulation as it has a market capitalization of nearly $43 billion.
In line with the terms of the contract, there was time for Concord to accomplish the transfer or pursue a shareholder vote to have an extension. Nonetheless, it seems that Concord intended to gain a time-limit interval. In the words of Jeremy Allaire (the CEO of Circle), Concord has played the role of a resilient collaborator and has contributed value during this entire procedure.
As per the CEO, the platform will keep on having an advantage from the support and advice offered by the wider team of Concord and Bob Diamond. He added that they were dissatisfied as the transfer timed out. But, he mentioned that turning into a public firm would still be a significant part of the main plan of Circle to improve transparency and trust. He also expressed an expectation that the crypto market would soon enter an exclusive phase of utility.
Apart from that, Circle specified that the 3rd quarter of this year was beneficial for them with cumulative reserve interest gains and revenue of almost $274 as well as a net profit of $43M. The firm presently has unrestricted cash of up to $400 million. The stakeholders did not straightly disclose the reason at the back of the termination of the respective contract.
A lot of private platforms opted to merge with special purpose acquisition companies (SPACs) also known as “bank check firms,” rather than going public through a conventional IPO to avail themselves of the advantages such as lower fees. Circle remained ineffective in obtaining authorization from the Securities and Exchange Commission (SEC) of the United States to accomplish a business merger.
It was improbable for the US-based securities regulator to provide approval under the crypto-skeptic chairman Gary Gensler. While commenting on this, a Twitter post was shared by the CEO of Circle. In his tweet, Allaire asserted that a considerably rigorous attitude has been shown by the SEC while dealing with the company’s business and in the case of several unique factors of the respective market, notwithstanding its role in the time out of the contract.
Crypto Winter Deters SPACs
The prolonged winter of the crypto industry has been a very important factor that paved the way for a gradual decline in the valuation of several firms. On the top of that list, the performance of the SPAC mergers has been much poor.
In this respect, the index benchmark of IPOX SPAC dropped by more than forty percent since touching its all-time high in 2021’s February. Similarly, eToro (a crypto exchange based in Israel) stopped its SPAC merger of up to 10 billion dollars this July following a downturn in the valuation thereof.