Circle preps $1B war chest to deal with market threats from PayPal and others

August 10, 2023 Coin Telegraph

Circle

Circle’s USDC stablecoin has dropped from $45 billion in circulation at the start of 2023 to just $26 billion as the summer winds down.

Stablecoin issuer Circle has a $1 billion cash reserve pegged as insurance against a declining market capitalization and fresh competition from the traditional finance and technology industries, said CEO Jeremy Allaire.

In an interview with Bloomberg, Allaire revealed the war chest and shared his views on the uptick in competition from organizations such as PayPal that are new to the stablecoin space:

“I expect you will see many many, not just internet payments firms, but also all kinds of financial services companies and others begin to get more involved in this. It’s great to have this new competition. I do think it’s going to drive more and more companies into the field.”

Circle is best known for its USDC (USDC) stablecoin, a digital token similar in design to regular cryptocurrency but backed entirely by fiat — in this case, the United States dollar.

However, since at least 2021, the company’s primary form of revenue has come from interest on its cash holdings and through its treasuries services. For the first half of 2023, Circle had a reported revenue of $779 million, surpassing its total revenue of $772 for 2022.

Despite this, the company has seen its market share in the stablecoin space decline from $45 billion at the start of 2023 to $26 million in just seven months.

Allaire attributes this decline to cryptocurrency exchange Binance’s decision to pull backing from USDC in favor of its own token and other unfortunate events in the market. “The Terra collapse helped us; the Binance forced-conversion hurt us,” the Circle CEO told Bloomberg, adding that “the FTX collapse sort of helped us, and then the failure of regional banks hurt us.”

In related news, as Cointelegraph recently reported, Circle launched a wallet-as-a-service API for developers as part of its current ongoing Web3 initiatives. According to an Aug. 8 announcement, the new API will allow devs to create bespoke multiparty computation wallets for their customers.

Circle CEO Jeremy Allaire Says Majority of USDC Adoption Comes From Outside the US

August 9, 2023 The Daily Hodl

USDC issuer Circle launches MPC wallet beta for Ethereum, Polygon, Avalanche

August 8, 2023 Coin Telegraph

Circle

The stablecoin issuer launched a service and API that allows developers to create customized wallets for their users.

USD Coin (USDC) issuer Circle has released a beta version of a multi-party computation wallet (MPC) service, according to an Aug. 8 announcement. The new service will allow developers of DeFi apps, Web3 video games, e-commerce services, and other blockchain applications to create customized wallets specifically for their users. It will be available initially on Ethereum, Avalanche, and Polygon.

Building crypto apps is still too hard. Plus, less than 0.5% of the 100 million developers worldwide are actively building crypto apps today.

This needs to change. Our new wallet-as-a-service developer platform is a huge step in that regard. Check it out https://t.co/ku9LTz8Z97
— Patrick Hansen (@paddi_hansen) August 8, 2023

MPC wallets are secured by splitting the user's private key into multiple shards and distributing them through a decentralized network. It’s a new wallet technology many Web3 developers have been using. MPC wallets can be accessed via an application programming interface (API), giving them a “Web2 feel” that some developers and users prefer.

According to an explanatory blog post from Circle, the new service will allow developers to “choose the best wallet security and control configurations.” For example, some developers may want to host their own MPC nodes to ensure they are not completely reliant on Circle, while others may want to choose the simpler method of connecting to Circle’s nodes. Developers can also choose to “share transaction signing responsibilities with the users,” allowing them to recover keys if users lose them, or they can make the product noncustodial by requiring users to sign every transaction.

According to Circle co-founder and CEO Jeremy Allaire, the new service is essential in promoting the use of USDC:

“Circle’s Programmable Wallets is part of a new, core pillar of our strategy to advance global, mainstream utility and adoption of digital assets like USDC and public blockchain-based payments[.] This new platform marks the first step for Circle’s Web3 services as we work to ease common pain points for developers[.]"

MPC wallets have faced controversy recently, as the widely used Multichain MPC bridge was hacked on July 7, causing investors to lose over $100 million. The Multichain team later admitted that all MPC shards had been stored on a cloud server under the control of their CEO.

In an emailed statement to Cointelegraph, Circle's senior director of product management Gagan Mac claimed that the new service “is built and maintained in-house, and doesn’t leverage external vendors,” implying that third-party cloud storage systems will not be used. In addition, Gagan stated that “some developers and enterprises may prefer to host an MPC node,” which they will be allowed to do if they wish. Multichain did not allow partners to host their own nodes.

Circle recently stated that the demand for Euro-based stablecoins is heating up and also argued that a Yuan stablecoin will be better than a Chinese CBDC.

Circle CEO: 70% of USDC adoption comes from outside the US

August 8, 2023 Coin Telegraph

Africa

Major stablecoin issuers Tether and Circle are focusing on non-U.S. markets where adoption is growing.

Circle CEO Jeremy Allaire estimates as much as 70% of USD Coin (USDC) adoption comes from countries outside of the United States.

On Aug. 8 tweet to his 131,300 followers on X (Twitter), Allaire said the high rate of non-U.S. adoption was “despite the hype that we're all about the US,” adding:

“We estimate that 70% of USDC adoption is non-US, and some of the fastest growing areas are emerging and developing markets.”

He added that strong progress was happening across Asia, Latin America (LATAM), and Africa.

Despite the hype that we're all about the US, we estimate that 70% of USDC adoption is non-US, and some of the fastest growing areas are emerging and developing markets. Strong progress happening across Asia, LATAM and Africa. Demand for safe, transparent digital dollars is…
— Jeremy Allaire (@jerallaire) August 7, 2023

Paolo Ardoino, CTO of rival stablecoin issuer Tether, echoed a similar non-U.S. focus for his firm and stablecoin. In February, he said that USDT can be “considered a safe tool for emerging markets and developing countries.”

Cointelegraph reached out to Circle for further details on non-U.S. expansion but had not received a response at the time of publication.

Allaire's comments came amid an announcement from PayPal tha it is launching its own USD-pegged stablecoin, PayPal USD (PYUSD), where he congratulated the firm and Paxos, adding:

"It's incredibly exciting to see such a significant internet and payments company entering the stablecoin space. This is what happens when we start to get regulatory clarity."

His comments also come amid a decline in USDC supply since the beginning of 2023, due to dwindling demand and an increase in redemptions. As a result, its stablecoin market share has shrunk to just 21% with a total circulation of $26.1 billion.

On Aug. 8, Allaire also commented on concerns over USDC liquidity, confirming that redemptions were outpacing issuance stating, “Over the past month, we've issued $5B USDC, and have redeemed $6.6B USDC.”

Allaire added that Circle’s global banking and liquidity network was expanding and the firm was working with “exceptional and high-quality banks in major regions around the world.”

USDC Liquidity. Over the past month, we've issued $5B USDC, and have redeemed $6.6B USDC.

USDC banking is public and transparent, with 24/7/365 mint/burn, and wire settlement with nearly 90 countries.

USDC reserves are attested by Deloitte every month, and all of our T-bill…
— Jeremy Allaire (@jerallaire) August 7, 2023

In a transparency report released on Aug. 3, the firm stated that its Circle Reserve Fund held a 93% portfolio of short-dated US Treasuries, overnight US Treasury repurchase agreements, and cash. The remaining 7% is cash reserves at banks, according to Circle.

In early June, Circle announced that it had received a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS).

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Euro stablecoin market set to take off, thanks to real-world uses, regulatory clarity: Circle exec

July 17, 2023 Coin Telegraph

Circle

Circle’s Patrick Hansen provided an overview of the euro-denominated stablecoin market at EthCC; it all looks rosy, he said.

The future is bright for euro-denominated stablecoins, according to Patrick Hansen, European Union strategy and policy director at Circle. The United States dollar may preserve its “first mover” advantage, but euro stablecoin will see increasing real world use cases emerge to lift it above its current meager market share, Hansen said at EthCC in Paris.

Euro-denominated tokens currently represent 0.3% of the stablecoin market and are worth $300 million. At the same time, the euro occupies 20% of the traditional monetary system. It is in second place to the U.S. dollar in both instances and may stay in that position for a while. Hansen explained that the stablecoin market began with the dollar, and:

“Liquidity begets liquidity.”

With lower liquidity on the market, euro stablecoin users face higher risks and usage costs.

However, “we are currently moving from speculation to utility,” Hansen said of crypto capital markets as a whole. Increasing use of stablecoin in remittances, business-to-business transactions and other cases show this, and users will want to use stablecoin in their local currency for these purposes, Hansen said. Integration of euro stablecoins into existing European payment systems will also boost its use.

Decentralized finance will go the same way, with real-world uses, such as car loans, being delivered in local currency. This will lead to more regionalized liquidity pools, he explained.

What does a cup of coffee have to do with the future of the global economic system? As the US Congress prepares for its first vote on Stablecoin laws, US political leaders have a choice to make about the US and Dollar competitiveness. A video for political leaders below. $USDC pic.twitter.com/9sQyZwq4WE
— Jeremy Allaire (@jerallaire) July 13, 2023

Passage of Markets in Crypto-Assets (MiCA) regulations will provide regulatory clarity in the European Union. Hansen added:

“I would even go so far as to say regulatory incentives.”

The euro-denominated stablecoin market is now dominated by five tokens, including Circle’s Euro Coin (EUROC), which it introduced in June 2022. Circle has applied for a license in France to make EUROC a “full compliant e-money token,” Hansen said.

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Circle CEO spells doom scenario for US dollar in warning to Congress

July 14, 2023 Coin Telegraph

Circle

Jeremy Allaire claimed the U.S. dollar is “under threat” and urged lawmakers to pass stablecoin regulation to “build trust” in a digital dollar.

The United States dollar’s place as a global reserve currency will be under threat if Congress isn’t quick to regulate stablecoins, warns the CEO of Circle.

On July 13, Jeremy Allaire appeared in a two-minute video by Circle, the issuer of USD Coin (USDC), targeted at lawmakers.

It comes as bipartisan digital asset-specific legislation was reintroduced to Congress on July 12 which was originally tabled over a year ago in June 2022.

“The dollar's position of strength is under threat. Competition for what money gets used on the internet is increasing,” Allaire claimed in the video, highlighting the threat of foreign digital currencies.

What does a cup of coffee have to do with the future of the global economic system? As the US Congress prepares for its first vote on Stablecoin laws, US political leaders have a choice to make about the US and Dollar competitiveness. A video for political leaders below. $USDC pic.twitter.com/9sQyZwq4WE
— Jeremy Allaire (@jerallaire) July 13, 2023

“The real question is whether global commerce will happen in digital dollars, or digital euros or yuan,” he added. Allaire has previously claimed China could boost adoption and use of the yuan through stablecoins.

He said the U.S. “has a choice to make” on if it wants “dollars to be the foundation of currency on the internet” or if it will “let other countries lead the way?”

“If the dollar is to remain the world's reserve currency, if America is to lead the world economy for the next 10 years and beyond, then we need to build trust in digital dollars and regulate stablecoins today.”

In his argument for stablecoin regulation, Allaire claimed crypto will “fundamentally change the way we pay for things.”

He added “billions” will use crypto due to traditional financial payments taking “days” and fees amounting to “a nearly trillion dollar tax on the global economy.”

Would you rather own: A stablecoin backed by US govt securities paying as much as 5% interest or a deposit at a bank that looks a lot like a hedge fund paying 2%? The answer is clear. I hope US lawmakers support the development of well-regulated stablecoins rather than fight it.
— Mike Novogratz (@novogratz) July 13, 2023

Crypto investment firm Galaxy Digital founder Mike Novogratz seemed to agree with Allaire. He rhetorically asked his Twitter followers on July 13 if they’d rather own a stablecoin that pays a higher interest compared to a “bank that looks a lot like a hedge fund.”

The answer is clear,” Novogratz said. “I hope U.S. lawmakers support the development of well-regulated stablecoins rather than fight it.”

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China could benefit from yuan stablecoin over its CBDC — Circle CEO

July 11, 2023 Coin Telegraph

CBDC

China may have banned the use of cryptocurrencies, but stablecoins might have a role to play in the proliferation of its national currency.

Although China has closed its doors to decentralized cryptocurrencies, Circle CEO Jeremy Allaire believes that stablecoins could play a role in the proliferation of China’s digital yuan.

Allaire, who heads up the company behind the United States dollar-backed stablecoin USD Coin (USDC), suggested that a yuan-based stablecoin might be China’s best bet for driving the adoption of its national currency in an interview with the South China Morning Post.

“If eventually the Chinese government wants to see the RMB [yuan] used more freely in trade and commerce around the world, it may be that stablecoins are the path to do that more than the central bank digital currency.”

China cracked down on the use of cryptocurrencies in 2021 while simultaneously blazing the trail for the trial, testing and issuing of its digital yuan central bank digital currency (CBDC). As of January 2023, the Chinese government noted that some 13 billion digital yuan are in circulation .

Interestingly, the digital yuan website claims that the currency will replace the dollar, Tether (USDT) and all other stablecoins, while stipulating that the CBDC will not be a stablecoin. The website allows users to exchange cryptocurrency for digital yuan through MetaMask or its own conversion portal.

Allaire conceded that China is unlikely to warm toward using decentralized cryptocurrencies and stated that Hong Kong’s progressive attitude toward the crypto sector could signal subversive support from the mainland.

The Circle CEO also noted that moves by various governments and central banks around the world to develop CBDCs that move away from “legacy technology into more modern distributed ledger technology” was positive, but it should not be misconstrued as a move toward accepting decentralized and self-sovereign systems:

“There’s a whole bunch of things that are useful from that, but I view that as very different from the work that the private sector does to innovate on the public internet.”

Nevertheless, the digital yuan is finding its way across Chinese borders. As Cointelegraph previously reported, Singapore-based, cryptocurrency-friendly bank DBS has developed a digital yuan merchant solution allowing Chinese businesses to receive payments in the CBDC.

The service allows clients based in mainland China to receive or collect digital yuan and have settlements made directly to yuan-based bank accounts.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

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Stablecoin Issuers Circle and Tether Freeze Stablecoins Tied to Multichain Exploit: On-Chain Data

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Circle and Sequoia were among top depositors at Silicon Valley Bank: Report

June 23, 2023 Coin Telegraph

Banks

According to a Bloomberg report, other major depositors included Silicon Valley Bank, SVB Financial Group, biotechnology research company Altos Labs, and China-based firm Kanzhun.

Stablecoin issuer Circle and venture capital firm Sequoia Capital were reportedly among the top 10 depositors at the collapsed crypto-friendly Silicon Valley Bank (SVB) in March.

According to a June 23 report from Bloomberg, the Federal Deposit Insurance Corporation (FDIC) provided documents suggesting that Circle, Sequoia, and others were covered for deposits in the billions of dollars. The Federal Reserve announced following the SVB collapse that it would work with the FDIC to make both insured and uninsured depositors whole — in most situations, the FDIC only insures up to $250,000 per depositor.

Circle reportedly held roughly $3.3 billion in deposits, while Sequoia had roughly $1 billion. Other major depositors included Silicon Valley Bank itself, SVB Financial Group, biotechnology research firm Altos Labs, and Kanzhun Limited — a China-based company behind a major online recruitment platform.

WHOA. The FDIC accidentally posted an un-redacted document showing that the big VC firm Sequoia had $1 billion on deposit at SVB when it collapsed https://t.co/hCbcHZ0yev pic.twitter.com/Ys1qbHnvDr
— Joe Weisenthal (@TheStalwart) June 23, 2023

The failure of SVB, and the subsequent collapses of Signature Bank and First Republic Bank, have put a spotlight on how regulators in the United States handle deposit insurance. Though the Fed, FDIC, and Treasury Department said covering SVB and Signature deposits of more than $250,000 was part of a “systemic risk exception”, they have reportedly explored raising the insurance limit.

Following the failure of SVB in March and Circle confirming it had roughly $3.3 billion in exposure to the bank, the firm’s USD Coin (USDC) briefly depegged from the U.S. dollar. In June, the stablecoin issuer announced it planned to launch a native version of USDC on the Arbitrum network.

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Future Status of US Dollar at Crossroads, in Hands of Stablecoins, Says Circle CEO Jeremy Allaire

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Circle

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