Crypto unicorn Circle creates a dollar-pegged “stablecoin” and raises $110m
The latest fundraising round propels Circle’s valuation to almost $3bn. The investment was led by a Chinese cryptocurrency miner Bitmain.
The investment round was led by Bitmain, a Chinese cryptocurrency mining giant, which has recently attempted to expand its operations outside of tightly regulated China.
“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”, said Circle’s founders Jeremy Allaire and Sean Neville in a blog post.
Part of this “new global economy” is US dollar coin, USDC. USDC is a dollar-pegged stablecoin, which is supposed to enable cryptocurrencies to make their break into mainstream use.
“A price-stable currency, such as a token pegged to the US dollar, is critical for enabling mainstream adoption of blockchain technology for payments as well as for supporting maturation in financial contracts built on smart contract platforms, such as tokenized securities, loans, and property”, the founders explained.
USDC is not the first cryptocurrency pegged to a central bank-backed fiat currency but Circle claims it will be more transparent and better regulated than previous attempts. It operates within US money transmission laws and is based on an open source framework Centre. Centre is a subsidiary of Circle but it is open to participation for eligible financial institutions.
The aim is that customers and businesses can actually start using stablecoins in payments instead of simply investing in cryptocurrencies as a speculative investment.
USDC is just one fiat-backed stable coin type. The long-term goal is to have multiple stablecoins that can be used to do financial transactions around the world. The Chinese partner Bitmain will not only provide funding to Circle but also take part in helping Centre to introduce multiple stablecoins that are backed by different fiat currencies.
“Circle will only be the first issuing member of the Centre network, and further tokenised fiat stablecoins may be issued by other audited, licensed, participating network members”, Allaire and Neville said in their blog post.