Circle, a stablecoin issuer originating from the Republic of Ireland, has recently revealed its plans to shift its legal domicile to the United States. This decision is said to be in response to the Organization for Economic Cooperation and Development’s (OECD) proposal for a minimum tax of 15% on the profits of larger multinational corporations.
Circle Internet Financial Ltd., the stablecoin issuer, has reportedly confirmed its intention to relocate its legal base from the Republic of Ireland to the United States, although the specific reasons have not been disclosed. According to a report by Bloomberg, Circle’s decision to move is linked to its initial public offering (IPO) plans, which were announced at the beginning of the year.
As stated in Circle’s January announcement, the stablecoin issuer submitted a draft registration statement on Form S-1 to the U.S. Securities and Exchange Commission (SEC). This statement relates to the proposed IPO of its equity securities. At that time, Circle mentioned that the number of shares to be offered and the price range for the offering were yet to be determined.
By relocating its legal base to the United States, Circle, the issuer of the USDC stablecoin, is relinquishing the advantages of Dublin’s low corporate taxes, which have attracted major corporations like Apple Inc. and Pfizer. The OECD’s proposal for a minimum 15% tax on the profits of larger multinational companies is expected to diminish the benefits of Ireland’s low corporate tax rates.
Before deciding to move to the United States, the stablecoin issuer, supported by financial powerhouses like Goldman Sachs and Blackrock, faced challenges when its banker, Silicon Valley Bank (SVB), collapsed in the first quarter of 2023. Circle had $3.3 billion in cash reserves held at SVB when it failed. The bank’s collapse and subsequent events caused Circle’s stablecoin to deviate from its 1:1 parity with the U.S. dollar, dropping to $0.877 per USDC.
Later in the year, Circle faced additional concerns due to its alleged association with Justin Sun and claims that USDC had been utilized by terrorist groups. However, the recovering cryptocurrency market has seen the value of USDC in circulation bounce back from a low of $24 billion to slightly over $32 billion on May 15, 2024.
Conversely, the post-pandemic increase in interest rates is believed to have boosted Circle’s profitability, signifying a positive turn in the stablecoin issuer’s fortunes.
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