Circle, a startup payments company backed by Goldman Sachs, is set to launch a cryptocurrency with a value pegged to the U.S. dollar — similar to Tether (USDT) — after announcing a $110 million investment round dominated by cryptocurrency mining giant Bitmain.
A ‘COMPLIANT ALTERNATIVE’ TO TETHER
Goldman Sach-backed fintech startup Circle has announced its plans to launch a cryptocurrency pegged to the U.S. dollar, following an incredibly lucrative investment round dominated by cryptocurrency mining monopoly Bitmain.
The new dollar-pegged cryptocurrency sounds a lot like Tether (USDT), an occasionally controversial cryptocurrency token which is purportedly backed by one dollar for each token issued. Circle CEO Jeremy Allaire explained:
It unlocks an incredible amount of power for the dollar. It’s basically a dollar that operates on blockchain.
“Basically” is the keyword, however, since the dollar is the official currency of the United States and Circle’s new open-source stablecoin presumably isn’t.
Nevertheless, the new USD-pegged coin is meant to function like USDT by helping remove volatility from the notoriously volatile cryptocurrency market.
Unlike Tether, however, Circle customers must hold $1 for every USD-pegged coin, according to CNBC — likely in an effort to ensure regulatory compliance and attract institutional investors. Explained Allaire:
When I look at the convergence of traditional finance and the crypto space, it’s begging for that. There are a number of banks who are excited about it and will support it.
Allaire also added that Circle is planning on launching similar fiat-pegged coins for the euro and pound. However, they likely won’t be pursuing Asian currencies anytime soon.
Circle’s USD-pegged coin will reportedly run on the Ethereum blockchain but isn’t permanently married to the second-largest cryptocurrency by market capitalization. Noted Allaire:
Ethereum is the best bet but it’s not necessarily the end game. For now it’s specifically on Ethereum.
BACKED BY BITMAIN
Circle also announced the results of its latest fundraising campaign. It now claims that the latest $110 million investment round has increased the company’s valuation to almost $3 billion.
Cryptocurrency mining giant Bitmain forked over most of the cash, though Breyer Capital, Tusk Ventures, IDG Capital, Pantera, and Blockchain Capital also participated.