Where is the “U.S. Alipay” Circle that has been transforming

Circle, the issuer of the US dollar stable token USDC, hopes to become a national crypto bank.

A Circle blog post stated: “ We are working hard to embark on this path with the top financial regulators in the United States. Through the President’s Financial Markets Working Group, they are trying to better manage the large-scale private sector dollar digital tokens. The risks and opportunities that come. “

Before Circle entered the stable token market, it had made many transformations in the exploration of digital finance, and each transformation was of epoch-making significance.

Where is the "U.S. Alipay" Circle that has been transforming

The financial landscape of “U.S. Alipay”

Circle, established in 2013, was positioned as a “consumer finance company” at the beginning of its establishment, aiming to establish a bitcoin payment and transfer platform. Users only need to use Circle to achieve “cash-bitcoin-cash” fast Transfers are extremely efficient.

With the Bitcoin transaction business as the core, this is the first stage of Circle’s development.

In 2015, while the outside world was still arguing about the concept of Bitcoin and blockchain, Circle received $70 million in financing led by Goldman Sachs and IDG Capital, and was highly recognized by regulatory agencies, and was awarded by the New York Financial Services Authority The first digital currency license BitLicense . Subsequently, Circle released Circle Pay, a bitcoin application that supports people to buy and sell bitcoin and transfer money.

Where is the "U.S. Alipay" Circle that has been transforming

In June 2016, Circle completed a key D round of financing. In this financing, US$60 million was raised. IDG led the investment, and many Chinese companies participated. Chinese companies such as Baidu, Everbright and CreditEase followed suit. Circle, which has received investment from Chinese companies, even expanded its business to China and established a branch, Circle China. Circle saw the huge social market and tried to build Circle Pay into a social software. This idea also laid the groundwork for Circle’s later transformation.

Where is the "U.S. Alipay" Circle that has been transforming

From left: Sike China CEO Li Tong, Circle founder Jeremy Allaire, IDG Capital founding partner Xiong Xiaoge

In September 2016, Apple IOS 10’s iMessage supported users to use text messages to transfer US dollars, bitcoins, etc. The services involving bitcoin transfers were provided by Circle. In 2016 alone, Circle processed $1 billion in transactions, and the annual growth rate of the number of users exceeded 1000% , which can be described as a year of triumphant progress.

From 2015 to 2016, Circle’s business layout has always been based on Bitcoin, and the industry even equated Circle and Bitcoin transactions . But this idea is about to be broken.

At the end of 2016, the Bitcoin bifurcation/expansion dispute intensified, and the development speed of Bitcoin has also slowed down a lot, which also allowed Circle to see the flaws of Bitcoin as a payment carrier. At the end of December, Circle announced that it ” abandoned the Bitcoin business “, users could not continue to buy and sell Bitcoin in Circle, but the Bitcoin and legal currency transfer business remained.

After cutting off the Bitcoin business, Circle took nearly a year to find the next piece of business territory.

In October 2017, Circle launched “Circle Trade”, an OTC trading platform.

In early 2018, Circle spent another US$400 million to acquire Poloniex, a US digital token trading platform. This Poloniex the first to provide Ethernet Square transaction, first exceeded $ 1 billion in daily trading volume trading platform in the industry mixed, account balance display is not normal, the user account is locked many times, been attacked by hackers, accused of manipulating the voting public chain …… Poloniex brings customers and transaction traffic to Circle, but it also planted “thunder” at the same time .

However, at the time, Circle, which was favored by the market, capital, users and even supervision, was in full swing and had no time to look at it. In July 2018, Circle and Coinbase launched a stable token USDC anchored to the U.S. dollar. USDC creates stability in the cryptocurrency market in a new way, and at the same time restores the trust lost in the early disputes surrounding Tether in the crypto community. Because USDC’s reserves are always subject to the allowable investment rules under the state currency transfer regulations, that is, supervision.

In October, Circle acquired the equity crowdfunding platform SeedInvest, and later established Circle Reseach, which provides news and reports on the crypto industry.

Circle’s layout has basically taken shape: payment platform Circle Pay; crowdfunding platform SeedInvest; OTC trading service platform Circle Trade; trading platform Poloniex; stable token USDC. At this time, Circle has become a company that provides diversified token services.

Turn around and embrace the rules after “Waterloo”

The blessings and the misfortunes rely on. For Circle, 2019 is a year of accidents.

First, in February, Cointelegraph issued an article stating that Circle’s valuation has fallen from US$3 billion to US$700 million in 9 months on the SharesPost stock trading platform , a 3/4 drop .

Misfortune never comes singly. In May, the acquired trading platform Poloniex was accused by the SEC of selling unregistered securities to users and had to remove 9 tokens .

The leaks happened in the evening rain, and the resignation of the three executives sent a bad signal to the outside world. CEO Jeremy Allaire began to express his dissatisfaction with the existing encryption regulatory policies in the United States more and more frequently in public.

Where is the "U.S. Alipay" Circle that has been transforming

When invited to the U.S. Senate Banking Committee’s hearing on the theme “Reviewing the Regulatory Framework of Digital Currency and Blockchain”, Jeremy Allaire also repeatedly mentioned the lack of transparent and open regulatory measures for the crypto industry in the United States:

As a result of the uncertainty and restrictive regulatory environment, many digital asset projects and companies have been registered outside the U.S. and prevented U.S. individuals and companies from obtaining related products and technologies;

The United States should not use laws from 100 years ago to regulate the technology of the 21st century;

Regulators should formulate special rules instead of incorporating encryption activities into the supervision of the existing financial system.

The core business is frustrated, Circle can only actively carry out “self-rescue” -the business focus has shifted to the stable token USDC .

In 2019, Circle cut off its original payment business Circle Pay, and Circle Research was also suspended immediately.

In order to keep the “cake” of Poloniex, Circle transferred Poloniex’s business to Bermuda, where the regulatory environment is more relaxed. This year, in order to “spin off the business related to speculative encrypted token transactions,” Circle hopes to save money and avoid disasters, and has to allocate 10.4 million US dollars again to resolve the SEC’s lawsuit against Poloniex.

After cutting off the “side branches”, Circle’s business has become more and more focused in the field of encrypted tokens. Moreover, they are paying more and more attention to and catering to supervision.

In April 2019, SeedInvest, the crowdfunding platform acquired by Circle, obtained the Alternative Transaction System (ATS) license granted by the Financial Industry Regulatory Agency (FINRA), becoming the first equity crowdfunding platform approved by FINRA to operate the secondary trading market.

The stable token USDC is publicly reported on the financial status of the issuance through the professional services company Grant Thornton every month. In January 2021, the U.S.’s largest banking regulatory agency, the U.S. Treasury Office of the Comptroller of the Currency (OCC) announced on its official website that U.S. banks are allowed to use the chain and USD stable tokens as the settlement infrastructure in the U.S. financial system. As a compliant USD stable token jointly issued by Coinbase and Circle, USDC has become a beneficiary under the new regulatory framework .

Where is the "U.S. Alipay" Circle that has been transforming

USDC disclosed asset composition

In March 2020, Circle launched a stable token business API and USDC corporate accounts to allow more companies to accept USDC as a payment method. The number of such accounts soon exceeded 1,000. CEO Jeremy Allaire publicly stated that most of these new users come from Internet companies. Judging from the feedback from Asian market participants, these growing demands are mainly from small and medium-sized enterprises, and their demand for a safe and practical digital dollar.

USDC also got the platform of traditional payment giants. On December 2, 2020, payment giant Visa will reach a cooperation with Circle to integrate its payment network with 60 million merchants with USDC, a stable token issued by the latter.

Where is the "U.S. Alipay" Circle that has been transforming

 Cooperation between Visa and Circle

In 2020, under the epidemic, USDC was used to distribute aid funds to the Venezuelan people. The donor used the original funds to mint the US dollar stable token USDC and transferred it through the US dollar-denominated payment platform based on blockchain technology. For this reason, some foreign media commented on USDC as “a new weapon for the United States to penetrate other countries.”

Stable token, the road is hindered and long

The USDC at the current stage is still only issued on the ERC-20 chain. Compared with another stable token USDT that has a layout in ERC-20, EOS, Tron, Algorand and other chains, it lacks a clear competitive advantage .

From the data point of view, although the circulating market value of USDT is only 2.34 times that of USDC, the 24-hour trading volume and turnover rate of USDT are several orders of magnitude higher than USDC, and USDC cannot compete with it at all. USDT relies on TRON’s rapid, efficient and low-fee development, and cross-chain has naturally become the only way for the rise of USDC .

Where is the "U.S. Alipay" Circle that has been transforming

Circle also realized this.

Therefore, according to the draft announcement of the USDC Management Center, it is expected that in the next few months, USDC will be issued on 10 blockchain networks including Avalanche, Celo, Flow , and Hedera.

As a stable token with strong development, the most dazzling label on USDC is compliance. If it can be successfully expanded on multiple blockchain networks, it will inevitably further accelerate the growth of USDC in the stable token market.

Circle submitted the S-4 form to the US SEC in August. The content showed that from the beginning of 2020 to the end of July 2021, USDC’s circulation increased from 400 million U.S. dollars to more than 27 billion U.S. dollars, an increase of more than 65 times .

Where is the "U.S. Alipay" Circle that has been transforming

 (Original link https://sec.report/Document/0001104659-21-101498/)

The DeFi boom has also contributed to the flames. Out of compliance and security considerations, most projects are more willing to use ETH and USDC to establish a trading pair fund pool. As of July, the USDC locked position in the Uniswap fund pool was 3.34 billion U.S. dollars, and the USDT locked position was 1.66 billion U.S. dollars. In terms of trading volume, the trading volume of USDC trading pairs reached 6.02 billion U.S. dollars, and the trading volume of USDT trading pairs was 1.85 billion U.S. dollars. These data all reflect that Uniswap users have a more obvious tendency to use USDC transactions. The same trend also appeared on Aave.

Circle management predicts that by the end of 2023, USDC in circulation will grow to 194 billion U.S. dollars. This is due to the continued global adoption of tokens to meet payment, commercial and capital needs, and more and more use cases.

In this way, once the chain expansion is completed, USDC is quite perfect. But everything has pros and cons, and stable tokens that cater to supervision will inevitably leave backdoors to facilitate law enforcement. The probability of USDC funds being seized is also higher than other stable tokens.

Where is the "U.S. Alipay" Circle that has been transforming

And next, Circle will also face a new transformation-going public.

Some time ago, Circle issued an announcement stating that the company will merge with SPAC company Concord Acquisition (CND.US) for listing. The transaction is expected to be completed in the fourth quarter, Circle will be listed on the New York Stock Exchange, and the transaction code will be changed to “CRCL” after the listing.

Circle once again followed the tide of the times, seeking to go public, embracing formality and legality.

Circle CEO Jeremy Allaire tweeted: “As part of our transformation from a private company to a public company, this has also created opportunities for Circle, so that we can also provide higher levels for our business built around USDC and the reserves that support USDC. transparency.”

From this perspective, Circle is bound to accept stricter asset supervision after its listing .

The main anchor of stable tokens is mainly US dollars. The stable token is the continuation of the US dollar in the virtual world. Traders use stable tokens to quickly transfer the value of US dollars between trading platforms, so stable tokens play a key role in the $1.4 trillion global token market.

With the emergence of stable tokens, the “Bretton Woods System” in the crypto world is about to emerge.

We believe in the ability of encrypted tokens to “subvert the financial system”, while seeking a sense of security under the traditional trust currency system; while users are afraid of the lack of checks and balances behind the supervision, while at the same time they vote for supervision in the crypto world. Species under. This kind of black humor is performed every day.

Everyone has to climb several mountains and cross several rivers in his life to find the mission that accompanies him throughout his life. The same is true for the company. The path that Circle chooses under the protection of supervision, how wide and far can it go, this result may redefine the stable token. 

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/where-is-the-u-s-alipay-circle-that-has-been-transforming/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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