Circle raises $400M at a $7.7 billion valuation

Ahead of a planned (and revised) SPAC merger, stablecoin issuer Circle announced $400 million in new funding from BlackRock, Fidelity, and others.

Why it matters: With investors like BlackRock on board, the deal shows some traditional financial institutions want to get into crypto in general — and into stablecoins in particular.

Flashback: In his annual letter to shareholders last month, BlackRock chairman Larry Fink underscored the impact the war in Ukraine had on accelerating cryptocurrency adoption and the company’s growing interest in the technology.

• “As we see increasing interest from our clients, BlackRock is studying digital currencies, stablecoins and the underlying technologies to understand how they can help us serve our clients,” he wrote.
• This announcement also heralds a broader strategic role for Blackrock as the primary asset manager of USDC cash reserves and partner for exploring capital market applications for USDC.

What they’re saying: “With the $400 million, it's not just the capital that's going to allow us to grow — it's also the strategic partnership with BlackRock,” Circle CEO Jeremy Allaire said on CNBC shortly after the deal was announced.

• “This is a strategic investment aimed at increasing their role in this ecosystem with a trusted [partner] and trying to advance what's possible with stablecoins and digital currency on the internet,” he said.

Context: In a rare piece of good news for the SPAC market, Circle announced in February that it struck a revised agreement with Concord Acquisition Corp. (NYSE: CND) that doubled its valuation to $9 billion.

• As part of that agreement, the PIPE announced during the previous summer was canceled, but Circle had the option to raise up to $750 million.

Yes, but: This financing is not replacing the PIPE and is independent of the upcoming SPAC merger.

• According to a source with knowledge of the deal, BlackRock's financing agreement values Circle at $7.65 billion — or a 15% discount.
• Circle's overall valuation remains $9 billion, under the terms of its revised SPAC agreement.

The big picture: Even though it's getting in at a discount, it's clear BlackRock sees a big opportunity in stablecoins and a strategic partnership can help Circle move the technology forward.

Editor's note: This story was updated to make clear that Circle's overall valuation remains $9 billion.