Circle Lands IBM Patent Portfolio, Raising Questions About Enforcement

Circle, the issuer of USDC stablecoin, has acquired nearly 1,000 blockchain patents from IBM. The deal gives Circle what it calls the largest blockchain patent portfolio in the United States.

The portfolio covers a broad range of topics including blockchain systems, financial services, banking, insurance, and enterprise infrastructure. Circle says the acquisition will support its USDC stablecoin, the Circle Payments Network, and Arc blockchain.

Circle's General Counsel Sarah Wilson stated that intellectual property is critical to advancing their mission and expanding adoption of onchain infrastructure. However, the lack of detail on how Circle intends to use or enforce the patents has raised concerns among industry observers.

Fortune reported that Circle shares initially rose 2% following news of the acquisition but later fell nearly 5% after Morgan Stanley downgraded the stock and cut its price target from $106 to $38. The downgrade was separate from the IBM patent deal, but both developments reflect Circle's attempt to establish revenue sources beyond interest earned on USDC reserves.