Crypto company Circle is trying to double its valuation in the Spac deal to $9 billion

U.S. financial technology company Circle said on Thursday that its planned deal to list on Wall Street through a blank-check company chaired by former Barclays boss Bob Diamond had doubled in value to $9 billion.

The group that operates the U.S. dollar-pegged stablecoin USD Coin said it is moving forward with plans to merge with Concord Acquisition Corp and list on the New York Stock Exchange. This comes despite the collapse of an earlier $415 million agreement to finance the Spac deal, which had valued the combined company at $4.5 billion.

The company said it would instead seek to list with new investors at a valuation of between $7.65 billion and $9 billion, a significant increase that it claimed reflected "improvements in Circle's financial prospects and competitive position."

The tech giant cited the growth of its digital currency, with more than double the amount of U.S. dollar coin in circulation than when the initial Spac agreement was announced last July.

The transaction is expected to close by December, with the company blaming "a variety of reasons beyond the control of the parties" for the merger not being possible before the original closing date of April 2022.

Circle's recent announcement is part of a growing trend that has seen crypto-focused companies receive huge valuations as investors continue to pile into the hype-driven sector. Last month, cryptocurrency exchange FTX was valued at $32 billion in a new round of funding.

Concord said its previous financing agreements with investors including Marshall Wace, Fidelity Management & Research and accounts advised by Cathie Wood's Ark Investment Management have been terminated. However, it added that a new financing agreement could allow the company to raise up to $750 million from private investors.

“Being a publicly traded company will further increase trust in Circle and is a critical milestone as we continue our mission to build a more inclusive financial ecosystem,” said Jeremy Allaire, co-founder and CEO of Circle.

Circle, which operates USD Coin alongside cryptocurrency exchange Coinbase, has sought to position its stablecoin as a trusted and regulated tool for the non-cryptocurrency economy, announcing its intention to apply for a banking license last year. In addition to working on transaction processing with payment networks PayPal and Visa, it has pushed its currency as a tool for cross-border humanitarian aid and assistance.

Stablecoins are intended to form a bridge between traditional and digital money and help manage volatility during trading in the crypto market. They are also often used as collateral to make it easier for customers to purchase other cryptocurrencies.

The amount of stablecoins in circulation has skyrocketed over the past year. According to crypto data site CoinGecko, the value of USD Coin in circulation rose from $4 billion at the start of 2021 to $52 billion, while Tether, the largest stablecoin, rose from about $21 billion to more than $78 billion today.

However, stablecoins have attracted growing regulatory pressure amid concerns that they pose growing systemic risk. In November, a report from the President's Working Group on Financial Markets, made up of several U.S. regulators, said legislation was "urgently needed" and argued that operators should be treated like banks.

Some crypto analysts have questioned the rigor of the so-called attestations that major stablecoin issuers publish to show the amount and type of assets held in their reserves.

US Dollar Coin's reserves came under scrutiny after the company began investing in so-called "approved investments" as well as cash in 2020. Last August, Circle announced a move toward a conservative approach, holding only cash and short-term U.S. Treasury bonds.