It seems like Circle has cryptocurrency all figured out.
The point of Bitcoin isn’t just to use Bitcoin, despite what anarchists might think — it’s about using the digital currency to enable smoother, easier financial transactions. Circle has always gotten this, and that’s why it is moving from success to success in the established financial services space.
Boston-based Circle, founded by Jeremy Allaire and Sean Neville, was widely hailed upon its 2013 launch as a slick way to buy and sell bitcoins, but it has become much more. In so doing, it has seemed to have graduated from “bitcoin app,” pushed bitcoins and the blockchain to the backend, where they belong.
First, Circle became simply about moving money, rather than dealing in bitcoins. Then, it moved into the social space, attaching messages to transactions, and now explicitly calls Venmo and WeChat its competitors, rather than bitcoin wallets, such as Coinbase.
With its U.K. launch yesterday, Circle has made exchanging U.S. dollars and U.K. pound sterling easier to exchange — and it happens via bitcoin, or, as Circle would prefer to say, the blockchain.
Here’s how it is described on Circle’s blog:
The Internet empowers all of us to share content and media, express ourselves, and message our friends and family for free, regardless of borders, instantly and securely in many fun, delightful ways. Why is sharing money so different?
We don’t think it should be, and today UK citizens can take a step closer toward that new reality. People in the UK can now experience social payments over the open Internet in their native currency, pound sterling (GBP), using Circle’s updated apps for Android, iOS, and the Web.
Echoing our existing US dollar support (available in all US states), we’re also enabling people to make GBP payments that seamlessly cross currencies as needed — instantly, and with zero fees.
Finally, we’re also eliminating transaction and withdrawal limits for customers in all of the 150+ countries where Circle is available.
In its entire 1,200-word post, Bitcoin is mentioned only once, at the very end, and not as a component of Circle’s service, but simply something that exists out there in the world. But bitcoin is an essential and central part of Circle’s service, which makes the partnership with Barclays all the more daring. Barclays will hold the funds of British customers — in the U.S., Circle’s bank relationships are a bit less clear:
When you add funds to your U.S. Dollar Circle account, the funds will be placed by us into one or more custodial accounts (“Custodial Account(s)”) maintained for the benefit of Circle users at one or more banks insured by the Federal Deposit Insurance Corporation (“FDIC”), which have been established to provide pass-through FDIC insurance.
Barclays has long been a leader in the digital currency space, under the guidance of Simon Taylor and others, but this kind of bank-bitcoin partnership is unprecedented — “the first time that a large global bank has agreed to work with a Bitcoin company,” according to The New York Times, though it has received investment dollars from the likes of Goldman Sachs & Co.
Circle was also granted an electronic money license by the British regulator the Financial Conduct Authority. It has a history of working well regulators, picking up the very first BitLicense issued by New York State for the regulation of entities working in the cryptocurrency space, back in September.
It seems Circle is also taking a step into the credit space with today’s announcement. From TechCrunch:
Another change today is that Circle is dropping prior transaction and withdrawal limits for users, with Neville saying it now has enough confidence in its risk assessment tech for extending short-term credit to be able to lift the caps on how much users can send and receive.
Circle has played nice, but more importantly it has paid smart, and consequently it has positioned itself exactly where it was always thought bitcoin could see its optimal uses — moving money across borders and between currencies.2 - Readers Like This Post