US payments group Circle to make more Asia investments, expand stablecoin

Photo: Colin Watts / Unsplash

U.S. payments group Circle said it will make more investments in Asia to expand the use of its stablecoin, a fast-growing cryptocurrency pegged to the U.S. dollar, in the region.

Circle recently announced its first investment in Japan from a newly established venture capital arm, taking part in a 500 million yen ($4.4 million) funding round for JPYC, a startup working on a stablecoin tied to the yen. Circle also unveiled plans to set up a hub in Singapore to test stablecoins with companies in the city state.

“Asia has been one of the fastest growing markets for crypto from a trading perspective,” CEO Jeremy Allaire said in a video interview from Washington. “Our whole mission is to go from what you call the speculative value phase to the utility value phase, where you are utilizing this in a far greater number of types of transactions.”

The expansion into Asia comes as Circle prepares to go public in the U.S. by merging with a special purpose acquisition company at an estimated valuation of $4.5 billion. In 2019, Circle and U.S. cryptocurrency exchange Coinbase set up a joint venture that developed USDC, a stablecoin that has grown to become the second largest in value with a circulation of more than $35 billion.

Stablecoins differ from conventional cryptocurrencies in that they are pegged to an underlying asset, such as the U.S. dollar, to make their prices less volatile. A USDC, for example, normally trades at close to $1 most of the time. The stability makes them a useful way to buy and sell cryptocurrencies.

Allaire said that USDC initially became popular among traders because it is “faster, cheaper [and runs] 24/7” compared with using conventional dollars and that applications have since diversified. JPYC may follow a similar path, “with people who use it in trading and then in other applications like Defi and games and NFTs.”

Defi and NFTs are acronyms for decentralized finance, which refers to financial services that are delivered using blockchain technology, and non-fungible tokens, which are unique digital tokens designed to give authenticity to digital assets.

“Eventually, I think it will be useful in more international commerce applications,” said Allaire. The company plans to make a total of 50 to 70 investments per year globally, including “a lot in Asia,” with no fixed limit on the size of each deal.

Circle also announced that it will set up a hub in Singapore. Allaire said it will be working to “demonstrate the power and value of stablecoins to major Singapore companies.” The company also plans to hire executives and operational personnel.

The race to expand internationally comes as Circle faces tough competition with other stablecoins. Tether, the largest issuer of stablecoins, has seen its circulation balloon to $73 billion despite questions from U.S. regulators over its reserves. In October, the Commodity Futures Trading Commission said Tether will pay a $41 million penalty for making untrue or misleading statements about its stablecoin.

Central banks around the world are also exploring creating a digital version of their own currencies. China, which banned cryptocurrencies, has been testing the digital renminbi and plans to run trials in the Winter Olympics in Beijing. The Bank of Japan launched trials of its central bank digital currency in April.

“Efforts by governments to kind of create their own technology or to offer an option to their citizens for an alternative to the private sector certainly may emerge and will emerge in some places,” Allaire said. “But I think that for the most part, the model that we’ve seen develop in payment system innovation has been pretty much dominated by private sector firms in almost all parts of the world with rare exceptions.”

The article was first published on Nikkei Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.