Circle, a cryptocurrency payment service in the pre-IPO stage, is of interest to investors focused on late-stage company investments before going public.
- The Development History of Circle
- Investment Methods of Circle
- Financing of the Cryptocurrency Platform
The Development History of Circle
Founded in 2013, Circle is a cryptocurrency company functioning as a platform for digital currency transactions. The company's main philosophy is that blockchain and digital currencies will transform the global economic system, making it more open, efficient, and integrated.
In 2018, Circle released its own stablecoin USDC.
USDC is pegged to the US dollar at a 1:1 ratio, requiring Circle to maintain full dollar reserves for the circulation of USDC.
Circle publishes monthly reports confirming that the circulating USDC is fully backed by hard currency reserves. USDC is popular among crypto investors, leading to high demand for this currency.
USDC ranks 10th in the Coinmarketcap rating with a capitalization of 29.3 billion dollars. In March 2021, Visa announced support for USDC for transactions in its payment network.
Investment Methods of Circle
Circle does more than just issue USDC. In 2018, the company acquired SeedInvest, a platform to help startups raise funds. Circle also managed the over-the-counter trading platform Circle Trade and the investment application Circle Invest, both of which were sold in 2019 and 2020 as the company focused on its stablecoin.
In the same year, Circle acquired the cryptocurrency exchange Poloniex for 400 million dollars, aiming to become a universal marketplace for cryptocurrencies. According to a press release, one of the reasons for Circle's decision to go public was the desire to achieve transparency comparable to banking institutions.
Circle also applied to become a national commercial bank, aiming to bridge the gap between traditional assets and the world of crypto assets. The company's leadership believes that classic banking based on digital currency and blockchain technology can lead to not only a more efficient but also a safer and more sustainable financial system.
| Funding | Amount | Description |
|---|---|---|
| Total Funding | 711 million dollars | Raised over 9 investment rounds |
| Funding in May 2021 | 440 million dollars | From 11 investors, including Fidelity and FTX, before the planned public offering through a SPAC deal with Concord Acquisition Corp |
Circle filed documents with the Securities and Exchange Commission in August and will be traded on the New York Stock Exchange under the symbol CRCL.
Financing of the Cryptocurrency Platform
The main investors include companies such as:
- Fidelity Management & Research Co.;
- Third Point LLC;
- Marshall Wace and Adage Capital Management.
After the last round of investment in May, Circle was valued at 4.5 billion dollars.
If Circle successfully obtains a banking license, it could significantly expand its operations. It's possible that USDC will receive national recognition, becoming a direct competitor to the American dollar.
One of the main risks is regulation, as cryptocurrencies still do not have a clearly defined legal status. However, the appointment of Gary Gensler as the head of the U.S. Securities and Exchange Commission, who is positive about blockchain and cryptocurrencies, could be a positive factor for the crypto market in the U.S.
Although it's unlikely that cryptocurrencies will be recognized as a means of payment in developed countries, they may gain the status of an alternative investment instrument, marking a historically significant moment for the development of the crypto market.
