Circle Internet Financial, one of the important companies in the cryptocurrency market, is in talks with Coinbase and Ripple for a possible acquisition ahead of the initial public offering (IPO) process. Ripple’s bid, estimated to be $4-5 billion in XRP and cash components, was rejected by Circle as insufficient, according to banking and private equity sources. Circle, the issuer of the USDC stablecoin, filed paperwork with the U.S. Securities and Exchange Commission (SEC) in April for its long-awaited initial public offering. However, the IPO plans may not happen, as sources close to the company have said Circle has been in informal talks in recent weeks about selling to U.S. crypto exchange Coinbase or payments company Ripple. Circle is seeking a bid of at least $5 billion, the valuation it is targeting in the IPO, according to four banking and private equity executives familiar with the talks. “If Coinbase wanted to buy, Circle would sell in a heartbeat,” one of the people said. Another said the process was fluid and “things change every week.” Circle is reportedly still committed to the IPO process, but a roadmap for the IPO has not yet been announced and the investor roadshow has not yet begun. The relationship between Coinbase and Circle goes back a long way. The two companies formed a joint venture called Centre Consortium to issue USDC in 2018. When that partnership ended in 2023, Coinbase acquired a stake in Circle while Circle took full control of USDC. However, the companies still earn jointly from USDC reserve revenues. According to Circle’s S-1 filing with the SEC, the two companies share 50% of USDC reserve revenue, while Coinbase receives all of the revenue generated from USDC held on its platform. Recent financial data suggests that such revenues are increasing for Coinbase. Additionally, under the current agreement, Circle cannot enter into new distribution or partnership agreements related to USDC revenues without Coinbase’s approval, meaning Coinbase has significant control over Circle. Ripple’s $4 billion to $5 billion bid to acquire Circle was reportedly rejected as insufficient. According to Bloomberg’s April report, the offer is thought to consist of XRP and cash components. Ripple’s financial strength is quite remarkable: The company holds 4.56 billion XRP (about $11.77 billion) and an escrow reserve of 37.13 billion XRP (about $95.7 billion). But analysts say Coinbase, a publicly traded company, could be a more attractive buyer because it could quickly raise capital through stock sales or debt if necessary. Coinbase reportedly had $8 billion in cash on its balance sheet as of the end of March. *This is not investment advice.