In an effort to create a better alternative to the US Dollar, Circle Internet Financial Ltd. closed a $110 million funding round, with Bitmain as the leading investor.
Circle is one of many companies competing to create a fiat based digital currency, but their recently announced partnership with Bitmain may grant them an edge over their competitors. The purpose of Circle’s stable coin, which will be called USDC, is to grant all the benefits of cryptocurrencies, including the speed and security of transactions, without the risk of volatility. USDC will be backed one-to-one to the US Dollar, all of which will be stored in auditable accounts.
In a recent interview, Circle’s CEO Jeremy Allaire discussed USDC, saying “It’s a version of fiat that can move at the speed of the Internet with global reach, with much less cost, with high levels of security. It’s a huge improvement for how fiat money transmission can work around the world for consumers and for businesses who might want to collect digital payment with tokens.”
USDC will compete with other stable coins like Tether, MakerDAO, and Basis. Tether currently leads the pack as the premier stable coin of the cryptocurrency markets but has been surrounded in controversy over the past year. Earlier this year, reports surfaced that questioned whether or not Tether actually was backing the Tethers it “printed” with USD, as they claim to do on their website. These reports were further propagated by reports of the US government sending subpoenas to Tether. Tether also had its banking relationship with several major US banks cut, leaving many to question where the funds are being stored.
Bitmain, a multi-billion-dollar cryptocurrency mining equipment manufacturer, clearly recognizes the need for a better stable coin, and the potential profitability of one, hence their major investment in USDC.
USDC will be an ERC-20 token, based on the Ethereum network. The Centre Foundation will control who can issue new fiat-backed tokens and will be an independent entity operated under Circle. Currently, Circle and Bitmain are the only members of the Centre Foundation.
USDC will be released this summer, but it is unclear at this time where users will be able to purchase these tokens. It is also unclear whether or not Circle will charge users a fee to buy and sell the token, as company leaders have not yet clarified what fees will apply.