Circle Grabs $110M, Will Launch U.S. Dollar-Backed Cryptocurrency

The founders of Circle Internet Financial have a lofty vision for the nascent world of cryptocurrencies and blockchain systems—and their startup’s role in it. Now, they have more resources to try and execute that vision.

Boston-based Circle announced Tuesday it raised $110 million in a Series E equity funding round, and it plans to launch a new cryptocurrency pegged to the price of the U.S. dollar and backed by reserves of the fiat currency.

The new funding was led by Bitmain Technologies, a China-based developer of computer chips and computing equipment used to “mine” the cryptocurrency Bitcoin. Other investors in this financing round include previous Circle backers IDG Capital, Breyer Capital, General Catalyst Partners, Accel, Digital Currency Group, and Pantera Capital, as well as new Circle investors Blockchain Capital and Tusk Ventures, Circle said in a blog post.

The latest investment values Circle at nearly $3 billion, a spokesman told Xconomy. Circle has raised a total of $250 million in venture capital since Sean Neville and Jeremy Allaire (pictured above) founded the company in 2013. Its other investors include Goldman Sachs (NYSE: GS) and Baidu (NASDAQ: BIDU).

Circle is essentially trying to create a new kind of banking and financial services firm, powered by cryptocurrencies and the blockchain software underpinning them. Circle’s products and services include a mobile payments app, a cryptocurrency trading desk for large “institutional” buyers and sellers, a new app that lets individuals invest in cryptocurrencies, and a cryptocurrency exchange.

Circle is having a big year. It added the cryptocurrency exchange when it acquired Poloniex in February for a rumored price of $400 million, according to a Fortune report based on anonymous sources.

Bringing Poloniex into the fold put Circle on track to generate more than $1 billion in annual revenue, Fortune reported. In a recent interview with Xconomy, Allaire, Circle’s CEO, declined to disclose the company’s revenues, but he said it has been profitable since last year.

With business apparently humming, the company is making more moves. The new cryptocurrency, dubbed USD Coin, is a so-called “stablecoin” designed to avoid the volatile price swings some cryptocurrencies have suffered from. But with USD Coin, Circle says it aims to address some of the weaknesses of existing fiat-backed cryptocurrencies by “providing detailed financial and operational transparency, operating within the regulated framework of U.S. money transmission laws,” and working with banks and auditors.

Working with regulators and established banks has been one of Circle’s operating principles, unlike some in the cryptocurrency sector. “As I like to say, go in through the front door—don’t go hide in the shadows,” Allaire told Xconomy recently.

USD Coin will be overseen by Centre, a venture Circle created last year. Bitmain will be a partner in the effort; the plan is for the company to help Centre launch multiple fiat-backed cryptocurrencies, Circle said.

If blockchain tech and cryptocurrencies take off in the way Circle and its partners envision, people will be able to “transmit value to anyone, anywhere, instantly, at zero cost, the same way I can share my opinion globally at zero cost or share content with someone instantly, globally,” Allaire told Xconomy. “And so, you have a more open, global, inclusive economy that’s made possible when this stuff gets delivered at scale.”

Jeff Engel is a senior editor at Xconomy. Email: jengel@xconomy.com Follow @JeffEngelXcon

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