How Circle's IBM patent deal shakes up stablecoins

• Key insight: Circle acquired nearly 1,000 blockchain patents overnight through buying up IBM's portfolio of distributed ledger tech patents.
• What's at stake: Circle could use the patents either defensively to strengthen its IP protections or offensively to demand payment from banks using IBM's blockchain tech.
• Expert quote: "Circle just gained a trump card it could use if the competition gets too heated." —Coin Bureau's Nic Puckrin

As Circle accumulates patents for the technology that supports digital assets, the banking industry will have to wait to see how the stablecoin issuer will use its new intellectual property. 

Circle said this week that it has acquired "fundamental assets" from IBM's blockchain patent portfolio. The portfolio comprises over 680 patent families and nearly 1,000 issued patents worldwide, according to a company statement.

IBM's patents cover distributed ledger technology that banks and credit unions use to support digital assets. Circle's USDC is the world's second largest stablecoin by market capitalization, and it's buying IBM's patents at a time when banks are becoming increasingly active in stablecoins. The patents will make Circle one of the largest blockchain patent holders in the United States, along with Bank of America.

The impact of Circle's move on banks of the deal depends on whether Circle will use the blockchain patents offensively or defensively, according to Nic Puckrin, founder of Coin Bureau and cross-asset analyst.

"At this point, it's not entirely clear which it is yet," Puckrin told American Banker. "If it's [defensively] the latter, then Circle is just protecting its turf and creating the foundation to expand its product range at a time when competition is heating up. If its strategy is more aggressive, we could see Circle increasingly demanding payment from other financial players for blockchain patents it now holds."

The patents span blockchain technology, banking, financial services, insurance, enterprise infrastructure, supply chain verification and secure cloud operations. Terms of the deal were not disclosed.

The deal "doesn't fundamentally change banks' strategy, although they may seek to balance Circle's implied strategic advantage by at least being prepared to shift more stable coin to other providers," Rick Spear, senior partner at Simon-Kucher, told American Banker, adding the patents could make Circle a stronger and safer digital asset provider.

Read more:

• The top-performing banks with $2B to $10B of assets in 2025
• How Block's using its license to threaten traditional bank lending
• Will banks get in on the prediction market gold rush?
• Jack Henry is using Google AI to defend 7,400 institutions

The intellectual property expansion supports Circle's financial products such as its USDC stablecoin and payments networks. The move also comes around a year after Circle joined the LOT Network, a non-profit group that aims to protect its company members against patent trolls that attempt to make money on frivolous patent litigation.

"Intellectual property is critical to advancing our mission and expanding adoption of onchain infrastructure," said Sarah Wilson, general counsel and corporate secretary at Circle. "IBM has been a pioneer in technological innovation, and this acquisition expands Circle's ability to advance the infrastructure that powers global, internet-native finance."

Circle and IBM plan to explore additional commercial opportunities, according to a company statement. IBM has been one of several companies building blockchain technology for banks and credit unions for the past decade. 

IBM is also one of the companies backing the recently unveiled Open Standard stablecoin initiative, which would compete directly with Circle's USDC stablecoin.

"Given the competitive pressures Circle faces on the regulated stablecoin front," Puckrin continued, "banks building tokenization infrastructure should certainly be paying attention. Circle just gained a trump card it could use if the competition gets too heated."