USDC Stablecoin Issuer Considers Moving Legal Home From Ireland to US

Circle, a stablecoin issuer based in the Republic of Ireland, has reportedly announced plans to relocate its legal domicile to the United States. The decision is believed to be a 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.

Republic of Ireland’s Low Corporate Taxes

The stablecoin issuer, Circle Internet Financial Ltd. (Circle), has reportedly confirmed its intention to relocate its legal base from the Republic of Ireland to the U.S., although no reasons were provided. According to a report by Bloomberg, Circle’s decision to relocate is tied to the firm’s initial public offering (IPO) plans, which were disclosed 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 with the U.S. Securities and Exchange Commission (SEC). This statement pertains to the proposed IPO of its equity securities. At that time, Circle indicated that the number of shares to be offered and the price range for the proposed offering had yet to be determined.

By transferring its legal base to the U.S., Circle, the issuer of the USDC stablecoin, is forfeiting Dublin’s low corporate taxes, which have lured corporate giants such as Apple Inc. and the pharmaceutical group Pfizer. As noted in the report, the Organization for Economic Cooperation and Development (OECD)’s proposal for a minimum 15% tax on the profits of larger multinationals is expected to diminish the advantages of Ireland’s low corporate tax rates.

Circle’s Fortunes Take a Turn

Before plotting its relocation to the U.S., the stablecoin issuer, backed by Wall Street powerhouses like Goldman Sachs and Blackrock, encountered difficulties after its banker, Silicon Valley Bank (SVB), collapsed in the first quarter of 2023. The stablecoin issuer 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’s alleged affiliation with Justin Sun as well as claims that USDC had been used by terrorist groups, caused additional concern for the stablecoin issuer. However, the rallying crypto market has seen the value of USDC in circulation rebound from a low of $24 billion to just over $32 billion on May 15, 2024.

Conversely, the post-pandemic rise in interest rates is believed to have enhanced Circle’s profitability, marking a turnaround in the stablecoin issuer’s fortunes.

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