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 USA dollar and backed by reserves of the fiat currency.
Circle said that it is set to issue the new crypto token this summer.
Cryptocurrencies such as bitcoin have struggled to take hold as viable alternative forms of payments, in part due to their extreme volatility. Although there's risk involved, many businesses are fascinated with the blockchain, an underlying technology which they think can help in making the transactions cheaper and real quick.
He believes a new type of token, so-called "stablecoin", which is a cryptocurrency whose value is pegged to a stable traditional currency and backed by fiat currency reserves at a central bank, is the solution to overcome the volatility, serving as a digital medium of exchange.
Circle CEO and co-founder Jeremy Allaire recently boasted that Circle is "one of the biggest and possibly one of the most profitable crypto-companies in the world", and that the fintech company is now worth close to $3 billion. He added: "Something like this makes it more possible".
On its company blog, Circle said a USD-pegged token is essential for blockchain tech and payments to be adopted widely. The company plans to make Centre independent as other firms join the network, Allaire said. Bitmain is one of the world's largest cryptocurrency mining companies and a leading manufacturer of the hardware needed to mine.
"A price-stable currency, such as a token pegged to the USA dollar, is critical for enabling mainstream adoption of blockchain technology for payments as well as for supporting maturation in financial contracts built on smart contract platforms, such as tokenized securities, loans, and property". It forms the backbone of Circle's blockchain payments network CENTRE, and will be available to trade on any exchange that accepts it, starting with Circle-acquired Poloniex.
USDC is being touted as a cryptocurrency that both tackles the volatility problem with other virtual currencies and ensures regulatory compliance.
The company goes on and details that "existing fiat-backed approaches have lacked financial and operational transparency, have operated in unregulated jurisdictions with unknown banking and audit partners, and have been built as closed-loop ecosystems and closed proprietary technologies".
The latest funding round will enable Circle to roll out a digital version of the US dollar called USD Coin (USDC), a cryptocurrency tied to the value of the US dollar.