Digital currencies such as bitcoin have caused a financial frenzy in the West, and some of the leading players in this new sector are now looking to Asia for business growth opportunities. Seeking to capitalize on this trend is blockchain-based financial services company Circle Internet Financial,which is backed by heavyweight investors including Goldman Sachs, IDG Capital, Baidu and CICC.
Focusing on mobile payments and cryptocurrencies, the Dublin-based startup claims to be “the most licensed company in the crypto market globally”. In 2015, Circle became the first company to receive a BitLicense from the New York State Department of Financial Services (NYDFS), which is considered the most restrictive state regulation for bitcoin in the United States.
It was also the first digital currency firm to receive an e-money license from the UK Financial Conduct Authority, which enables the company to launch across the entire European economic area.
As part of its growth plans, Circle recently announced the establishment of Asian operations in Hong Kong. In an exclusive interview with EJ Insight, the firm’s co-founder and CEO Jeremy Allaire outlined the expansion strategy in Asia and his expectations on the ‘frozen’ China crypto market.
EJ Insight: Can you tell us more about Circle and its major offerings?
Allaire: Circle is a company I co-founded five years ago, the vision of the company is that there should be a new infrastructure in the market that is being built around cryptocurrency and blockchain technology. And that infrastructure is going to make it possible for money to work in the same way that the internet works.
We try to build a modern, global consumer finance company on top of the crypto infrastructure. And we want to build it as a long-term company over the next 20 years that could redefine consumer finance and the experience of every consumer in the world. We are on a long journey in the vision.
Circle operates several different products and businesses. The simplest product is the Circle Pay, but it is not available in Asia yet. It allows you to pay anyone instantly, with no fees. You can pay someone in dollars, or across currencies.
Our second product is called Circle Trade, which is what we call the over-the-counter trading service; it is one of the biggest trading operators in the crypto market in the world. It serves the big institutions that are buying and selling crypto assets, which would be hedge funds, asset managers, and large traders, anyone who is trading at the underlying crypto assets. It now handles as much as US$4 billion a month.
The next product is Circle Invest. It just recently became available only in the US. The mobile app-based Circle Invest is for the average investors and individuals who want to invest in crypto easily, allowing users to invest in the top five digital assets.
Also, we recently acquired one of the largest crypto exchanges in the world, Poloniex, one of the fastest growing crypto exchanges for all types of digital assets. It has close to a hundred different types of digital assets, as well as millions of customers in over 100 countries.
Finally, we are growing from under 200 employees at the beginning of this year, to easily over 400 employees. And we are a very profitable company, generating significant revenues and a significant amount of profit.
Q: Circle is growing fast in the US, and has been gaining steam in Europe. Why are you expanding to Hong Kong and the Asia market? And How?
A: Circle Trade is the first business that we are building and launching in Asia, and the operations of Circle Trade of Asia is based in Hong Kong. We are not just building the operation for Hong Kong market, but all the major markets in Asia. We want to make sure that the product is available in the most important Asian markets, like Japan, South Korea, Singapore, and Southeast Asia, because Asia is such a significant market for crypto assets.
Circle Trade is market-making on all major exchanges globally, we are the major liquidity provider on all top-tier exchanges in the US and Asia. The number of clients that we can have in Asia is much, much larger and it is growing, I think we can have hundreds of major clients in Asia, and eventually thousands of major clients in Asia.
For Circle Trade business in Hong Kong, the initial focus is on the institutional market, like the firms in Asia whose business includes investing in crypto assets and virtual currencies. So we are not marketing to businesses and general consumers in Hong Kong, that’s not like a big marketing push that we need. But we want to make sure the institutional investment community in Hong Kong and the broader area in Asia region is aware of us.
Eventually, if we introduce retail products, like Circle Pay and Circle Invest, of course, that would require specific localization, licenses, marketing and customer support. Eventually, of course, we want to offer all our products in all major markets in Asia.
Q: As Chinese authorities have cracked down on virtual currency trading and initial coin offerings (ICOs) last year, what do you expect now from the Chinese market?
A: We can’t do business in Mainland China now because the law restricts China’s businesses and consumers from our company in terms of availing of services. That said, I think the Chinese government has been very embracing of the technology, the blockchain technology.
I think [China] will probably be the biggest economy in the world and have the biggest central bank in the world to have plans to move the economy to digital form, in the digital currency. As a government, it is more advanced in looking at this technology than almost any other countries in the world.
I see an enormous amount of entrepreneurship in technology innovation in Mainland China in the blockchain space. A lot of fundamental computer science in this space is coming from companies in China.
So we are very optimistic [about the China market] from a long-term perspective. In the short term, it is a restricted market, but in the long run I expect it will open up and become a major market for crypto asset and blockchain technology. It is certainly a major belief of us that China will be a leading economy in this ecosystem, but I think we have to wait a while.
Japan and Korea are the biggest retail markets in Asia today, and in the future, those will continue to lead, until there is the opening up in China market, and then China will lead.
This is the first of a two-part series on a conversation with Circle’s co-founder.
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