Stablecoin issuer Circle targets $7.2 billion valuation in upsized US IPO

By Arasu Kannagi Basil and Ateev Bhandari

June 2 (Reuters) - Circle Internet said on Monday it was targeting a valuation of up to $7.2 billion on a fully diluted basis in its upsized U.S. initial public offering, underscoring growing momentum in the stablecoin market.

The upsized IPO indicates strong investor appetite for crypto firms. U.S. President Donald Trump has not only promised friendlier regulations for the sector, but also sparked conflict of interest concerns due to several crypto projects associated with him.

"Issues regarding meme-coin hype and more specifically Trump's ventures into a namesake coin should not directly affect the outlook for stablecoins backed by hard currency," Michael Ashley Schulman, chief investment officer of Running Point Capital, said.

Stablecoins are designed to maintain a constant value, usually a 1:1 dollar peg, and are commonly used by crypto traders to move funds between tokens.

New York-based stablecoin issuer Circle and some existing investors are now looking to raise up to $896 million from 32 million shares priced between $27 and $28 apiece, up from their earlier offer of 24 million shares between $24 and $26.

Circle's dollar-denominated USDC, the second-largest stablecoin in the world, is expected to benefit from the pending stablecoin bill.

"The upsizing feels less like regulatory clairvoyance and more like a calculated bet that even a slow-moving bill won't derail the global payments story they're selling," Schulman added.

Circle's reserve income, its primary revenue source, from interest on the Treasuries backing its USDC coin, rose 55.1% to $557.9 million in the quarter ended March 31.

But distribution and transaction costs for the period jumped 68.2%, outpacing revenue growth for Circle, which distributes USDC primarily via its partnership with Coinbase and other third-party distributors.

Circle is poised to go public in New York later this week.