Bitmain has led a $110 million investment in Circle Internet Financial, in a funding round that values the company at $3 billion. Circle has also announced plans to launch USDC, a stable coin pegged to USD.
Circle Bitmain Partnership
The investment is the largest ever raised by a cryptocurrency or blockchain company, eclipsing $107 million raised by banking consortium R3.
The company was valued at about $480 million in 2016 having previously raised a total of $136 million. Existing investors in Circle Internet Financials include IDG Capital, Breyer Capital, General Catalyst as well as Digital Currency Group.
The Boston-based company provides cryptocurrency trading and investment services. Circle Internet leverages blockchain technology capabilities to offer peer-to-peer payment services. It also offers over-the-counter (OTC) cryptocurrency trading.
By teaming up with Bitmain, the company is set on developing a fiat-based digital token, dubbed “USD Coin” or “USDC” that is to be backed by the U.S dollar. Bitmain will also help on the introduction of new stable coins supported by other fiat currencies while also making them interoperable around the world. The coins are to be stored in auditable bank deposits and redeemable by verified buyers.
USDC Coin: The Tether (USDT) Killer?
USDC is an ERC20 token based on the Ethereum network. The coins will carry all the attributes of virtual currencies but not the volatility aspect that has derailed their adoption in the mainstream sector.
“It’s a version of fiat that can move at the speed of the Internet with global reach, with much less cost, with high levels of security. It’s a huge improvement for how fiat money transmission can work around the world for consumers and for businesses who might want to collect digital payment with tokens,” said circle CEO, Jeremy Allaire.
Plans are already underway to integrate the new fiat backed coin on the Circle Pay payment app that currently supports over seven million users. The new token stands to play a more significant role and enjoy immense success should the company find a way to monetize it.
Circle Internet should be able to generate more revenues in 2018 with the unveiling of the new coin even though cryptocurrency trading volumes have taken a hit in recent months.
Taking Over Ripple
The CEO has also confirmed that USDC will seek to provide greater transparency. Part of the plan involves disclosing all the partner banks upon issuance of the coin. However, the company is yet to reveal the fees, if any, that people will have to part ways with to use the coin.
The fact that it is impossible to transmit dollars over the internet or use them on smart contracts is a problem that Circle Internet intends to solve with the fiat backed coin. While still in the early stages of development, USDC looks set to be a competitor of Ripple (XRP) seeking to create an alternative to the Swift interbank messaging platform.
Circle Internet has been making smart moves in the cryptocurrency space in pursuit of new opportunities for growth. Early this year it acquired Poloniex, the cryptocurrency exchange, in a deal believed to be worth $400 million. It has already announced plans to expand from 230 staff to 400 before the end of the year, with the opening of new offices in New York, London, Paris, Madrid, and Beijing.
The company won’t be the first one to introduce cryptocurrencies tied to fiat currencies. Many companies have already tried to build stable coins with varying degrees of success. Tether is one of the stable coins that has been in operation for quite some time with about $2.2 billion in circulating supply.