Mobile payments network Circle made two announcements this week which are likely to make a big splash in the blockchain industry. The first was a $110 million USD Series E equity investment and partnership with mining giant Bitmain; the second was its creation of a tokenized “stablecoin” asset designed to hedge against price volatility in crypto transactions.
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FT reported that the investment puts Circle into the “top tier of cryptocurrency companies by funds raised” and could value the company as high as $3 billion.
Bitmain is leading the round, joined by previous fellow investors IDG Capital, Breyer Capital, General Catalyst, Accel, Digital Currency Group, and Pantera. Newcomer investors Blockchain Capital and Tusk Ventures have also contributed. Circle posted:
Bitmain co-founder and CEO Jihan Wu is well known for espousing a vision similar to ours regarding the creation and adoption of a new global economy powered by cryptographic assets, distributed contracts, and open source blockchain technology.
On its company blog, Circle said a USD-pegged token is essential for blockchain tech and payments to be adopted widely. Extreme price fluctuations in crypto asset values often makes them risky tools for payments and storing value.
Its solution proposes fiat-backed digital tokens, the first of which will be “USD Coin” (or USDC). To be available in the coming months, USDC is aimed at traders looking for a more stable store of value to hedge in and out of trading positions, and new token creators who wish to create financial contracts denominated in assets less volatile than BTC or ETH.
Itself based on the Ethereum ERC-20 token standard, USDC will be available to anyone who has completed a KYC process. It forms the backbone of Circle’s blockchain payments network CENTRE, and will be available to trade on any exchange that accepts it, starting with Circle-acquired Poloniex.
The idea is for exchanges to redeem USDC directly for U.S. dollars (although they may charge a fee to do so), and for other creators to issue tokens based on the world’s other fiat currencies.
Though Circle didn’t mention the Tether (USDT) token by name, USDC appears to be a more regulator-friendly version of the USD-pegged asset popular on big exchanges like Bitfinex.
Fiat-backed crypto assets may be a widening trend for the traditional financial sector as well, with Japanese banking conglomerate MUFG also announcing this week it would create a token pegged 1:1 to the Japanese yen (JPY).
This week’s moves further reflect Circle’s on-again, off-again enthusiasm for cryptocurrencies — or at least, their overt endorsement of them in public. The company launched in 2013 as a consumer-friendly payments network that made it simple for users to buy and sell bitcoin, though “pivoted” away from its image as an exchange platform in 2016.
However, Circle continued to deploy blockchain technology as a backend mechanism, launching its own protocol called Spark (which later became CENTRE).
The company is led by founder and CEO Jeremy Allaire, a long-time Silicon Valley identity.
Since the start of the 2017 crypto asset boom and re-emergence of digital money in the mainstream mindset, Circle began making new plays in the space. It acquired digital asset exchange Poloniex in February 2017, and has further staked its claim to being a major blockchain company with this week’s announcements.
Is Circle making the right moves? Let’s hear your thoughts in the comments.
Images via Pinterest, Circle, Pixabay