Circle, an American blockchain-based financial company says that Bitmain leads its USD $110 million investment round. Bitmain is backing Circle’s plan to launch a stable cryptocurrency.
Circle Internet Financial Ltd., an American blockchain-focused financial company, has closed a funding round led by Bitcoin mining giant Bitmain Technologies for USD $110 million. By leading Circle’s Series E funding round, the China-based cryptocurrency mining equipment manufacturer Bitmain has extended its support to the launch of company’s stable cryptocurrency.
Circle was launched four years ago and earlier it worked as a brokerage service which allowed users to easily purchase and sell cryptocurrencies such as bitcoin. Later on, Goldman Sachs and IDG Capital Partners provided more than USD $130 million in funding which enabled Circle to switch its operations as a money transferring company by putting blockchain technology to use.
Now with Bitmain’s support, Circle is making a comeback into the crypto industry with the launch of a new product aimed at addressing one of the biggest issues of the crypto world, that is, volatility. The stable cryptocurrency will be competing with USD-backed Tether, MakerDAO, and Basis. At present, the US dollar backed Tether is dominating this space in the crypto world as the most stable coin. Reportedly, Tether has ties with cryptocurrency exchange Bitfinex.
Bitmain announced its investment in Circle at Consensus 2018.
Jihan Wu, Bitmain founder and CEO, said, “Our investment team is still quite small and we work fast.”
He told that Accell, General Catalyst, and IDG participated in the USD $110 million investment round, reported Joon Ian Wong of Quartz. Further, Wu stated that like Tether, Bitmain intends to develop and deploy a stable cryptocurrency called Circle USDC, which will be backed by the USD.
Earlier Wu highlighted the future possibilities of cooperation between financial organizations and the crypto backed private central banks. He believes that the development of stable cryptocurrencies may lead to the establishment of private central banks.
Wu stated, “It’s a very important enabler for a private central bank. Currencies can do good or bad things, so we need a certain framework to limit money laundering risks. If we have an open platform we can limit the potential negative things.”
It is to be noted that BitMEX research has found the US dollar reserves of Tether in Noble Bank in Puerto Rico. The BitMEX research reads:
“Over the weekend, the Commissioner of Financial Institutions of Puerto Rico released aggregate financial-system data for the calendar year ended 2017. Bank deposits in the International Financial Entities (IFE) category, which includes Noble Bank, were USD $3.3 billion, up 248% in the quarter ended December 2017. Total assets in the category were USD $3.8 billion, up 161% in the quarter.”
Tether has not released any audit results after the last audit from Friedman LLP in 2017, which has raised questions over its legitimacy. However, Tether is considered legitimate by BitMEX research and other media institutions because certified banks manage its USD holdings.
Noticeably, the association of Goldman Sachs and major cryptocurrency firms Bitmain is likely to bring some advantage to Circle over Tether. Most importantly, the investors will get regular audit results about its holdings in US dollars.
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