September 17, 2021 8:00 AM
 — 
3
 min

Circle

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Circle is a technology company founded in 2013 as a payment platform for settlements in cryptocurrencies. The company was founded on the belief that blockchain and digital currency will reshape the global economic system, effectively making it more open, efficient and integrated. In 2018, Circle created its own stablecoin called USDC. Stablecoin is a cryptocurrency that is usually backed by either fiat currency or another crypto asset. The USDC is backed by the US dollar at a 1: 1 ratio, therefore, in order to ensure the circulation of the stablecoin, Circle must maintain its US currency reserves in a timely manner and in full. Circle publishes a monthly report confirming that the USDC outstanding is fully backed by hard currency reserves. USDC is a popular coin among crypto investors, so the demand for it is quite high. In the Coinmarketcap rating, USDC ranks 10th with a capitalization of $ 29.3 billion. In March 2021, Visa announced that it would allow USDC to be used for settlements on transactions in its payment network.

Supporting the USDC issuance is not Circle's only business. In 2018, the company acquired the SeedInvest platform, which helps startups raise funds. Circle also operated the Circle Trade OTC trading platform and the Circle Invest investment app. However, both platforms were sold in 2019 and 2020 as the company made decisions to focus on its stablecoin. In 2018, Circle acquired the Poloniex cryptocurrency exchange for $ 400 million in an effort to become a one-stop cryptocurrency marketplace. According to the press release, one of the reasons Circle chose to go public is to increase transparency comparable to banking institutions. Circle has also applied to become a national commercial bank with the aim of bridging the gap between traditional assets and the world of cryptoassets. The company's management believes that classical banking based on digital currency and blockchain technology can lead not only to a more efficient, but also a more secure and stable financial system.

The company managed to raise $ 711 million in 9 investment rounds. In May 2021, Circle raised $ 440 million from 11 investors, including Fidelity and FTX. Following the deal, it became known that the company intends to go public through the SPAC deal with Concord Acquisition Corp, which is due to close at the end of the fourth quarter of 2021. Circle announced regulatory filings with the Securities and Exchange Commission in August. The company will be listed on the New York Stock Exchange under the symbol CRCL. Circle's main investors are Fidelity Management & Research Co., Third Point LLC, Marshall Wace and Adage Capital Management. In the last investment round in May, Cirle was valued at $ 4.5 billion.

We believe that, if successful in obtaining a banking license, Circle will have a unique opportunity to scale up its activities. It is possible that the USDC stablecoin can be recognized at the national level. Thus, the coin will become a direct competitor to the US dollar. Among the main risks, regulation can be distinguished, since until now cryptocurrencies have not received a certain status, enshrined in law. A positive moment for the development of the crypto market in the United States may be the appointment of financier Gary Gensler to the post of head of the US Securities and Exchange Commission, who spoke positively about blockchain, bitcoin and cryptocurrencies. We doubt that crypto currencies will be recognized as a means of payment in developed countries, but we fully admit that they can be assigned the status of an alternative investment instrument, which will be a historically positive moment in the development of the crypto market.


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