Circle Transfers Headquarters to US from Ireland Before Upcoming IPO

Stablecoin issuer firm Circle has decided to venture out of Ireland as part of a strategic move. The firm has decided to transfer its headquarters out of Ireland that could add to compliance costs but improve the goodwill among investors.

Circle Manages Second-Largest Stablecoin

Circle issues and manages the second-largest stablecoin product namely USDC. The firm has nominated the United States as the new base of operations.

It is interesting to note that the firm has made the decision at a time when cryptocurrency firms are under regulatory constraints in the region. A report from Bloomberg indicates that Circle confirmed its shift out of Ireland on 14th May 2024.

On this account, the firm has completed legal documentation to complete the legal requirements of the movement. However, the firm is yet to disclose the specific reason for the shift.

Experts have argued that the decision has something to do with the plans of Circle to become a public-listed firm. On this account, the firm has already submitted filings for an IPO event.

The filing was completed in a confidential demeanor and was preceded by a brief press conference in January. It is important to note that Circle will have to account for higher taxation ratios in the US in comparison to corporate taxes in Ireland.

Circle Introduces New Reforms Ahead of IPO

The executive brass of Circle is making a strategic shift to the United States regardless of increased taxation implications. The firm has noticed that the higher tax obligations are offset in comparison to the global taxation reforms carried out by the Organization for Economic Cooperation and Development (OECD).

The OECD was approved in October 2021 and enforced Global Anti-Base Erosion Rules applicable on multinational enterprises.

This rule implemented at least 15% taxation implication on globally operating MNEs. Circle’s biggest competitor Tether that issue the biggest stablecoin USDT by market cap has frozen billions of dollars in reserve as a backup for cybersecurity incidents, exploits, and scams.

Tether CEO Paolo Ardoino mentioned in a recent social media post that the project has blocked more than $1.3 billion in funds since the launch with $1.6 million associated with terrorist funding.

Tether highlighted 3 Ethereum addresses in 2022 with more than $150 million in USDT and added them to the blacklist. In the same year, the firm froze $8.2 million in USDT on the Ethereum network which led to the addition of 215 Ethereum addresses to Tether blacklist.

Tether went on to freeze $360 million in assets towards the conclusion of 2022. For 2023, the stablecoin issuer froze more than $817,000 in the form of USDT that was traced back to terrorist activities in Ukraine and Israel.

Circle to Face Regulatory Scrutiny in the US After HQ Transfer

During 12 month period, when Tether worked with 24 law enforcement agencies across 40 nations, the firm complied with 198 requests from regulators to block various wallets. On this account, the total number of blocked addresses on Tether has reached a total of 339 for the last 3 years.

In the meantime, Circle is working on a strategic shift to the United States despite the increasing regulatory constraints stemming from the Securities and Exchange Commission (SEC).

As per analysts, Circle will have to maintain strict adherence to security regulations for an IPO launch in the region. Regardless of the success of Coinbase IPO in 2021, the contention between the SEC and exchange platform continues to unfold.

Coinbase is currently attending court as a result of a lawsuit initiated by the SEC. The current market cap of Circle is estimated to be around $33 million.

Circle management has retained that the relocation decision is rooted is geared towards gaining investor trust. If Circle is able to successfully complete the IPO event, it could gain a strategic advantage over its competitor Tether. The second-largest stablecoin project managed to precede USDT in terms of total transaction count back in December 2023.