8btc Interview | Circle CEO: USDC Gives the Holders More Confidence in Transparency and Regulatory Compliance
In the last few months, Circle has been actively pursuing new growth opportunities such as the recent expansion to service international customers, and also offering fiat-to-crypto trading, and introduced new asset pairs for USDC on exchanges.
On July 23, we (8btc) spoke to Jeremy Allaire, CEO of Circle about the rise of USDC, global expansion, regulatory headwinds in the US and the future of the exchange space.
Q1. Could you please briefly introduce Circle? Apart from issuing USDC, what else does Circle do?
Jeremy Allaire: Circle is a global financial technology company founded in 2013 with a vision and a mission to make different currency payments as common and easy as sending data or content or messages on the internet.
And over the past seven years, we‘ve built and operated consumer products, institutional trading products，retail brokerage products. And then over the past two years have been issuing and building the fastest growing regulated digital dollar stablecoin usdc.
In addition to the usdc, we also have launched a suite of services for businesses and developers that want to integrate stablecoins into their payment workforce into their online commerce applications or into other financial applications like syntax applications and savings or lending or banking. We provide that as a platform service that businesses can go on top of, and that is the current business of circle today.
Q2. What did you do before you joined Circle? When did you know crypto industry for the first time?
Jeremy Allaire: My first companies were building the sum of the very early programming languages for the web. A platform infrastructure that allowed people to build interactive software applications on the internet in the nineties.
I worked on platforms for media and communications on the internet like the flash platform flash player and all the tools around that. And then I built on my video systems for doing television on the internet.
That was my last company. And in 2012, I had taken my last company done a IPO on Nasdaq. And later that year，I learned about bitcoin and I learned about cryptocurrency and blockchain.
It was very exciting to me and I became obsessed with it. And by the time it was early 2013, I knew that this was the future that I wanted to build a new company, a new kind of financial company built entirely on digital currency.
Q3. How many crypto exchanges that have launched usdc what’s their name？
Jeremy Allaire: Yeah, so we can give you a comprehensive list, but it’s very comprehensive today. Many leading exchanges support usdc pretty much that all of the leading mobile wallet support usdc, the regulated digital asset support usdc the prime brokerage provide market makers OTC trading services. They all have very strong support for usdc.
Q4. Why did circle decide to reduce the business lines and focus on stablecoins?
Jeremy Allaire: So as I said before, when we found in the company, the fundamental mission and the fundamental idea was that we believe that eventually you could take traditional money like central bank money and create digital currency versions of that central bank money that could be exchange over public networks over public blockchain networks. And that kind of open network model could revolutionize value exchange for people everywhere and eventually also create new kinds of financial services products that were built on the kind of free exchange of value.
It took over five years for all of those things to be one to make that vision possible. So during that time we as circle wrote different waves of the crypto industry， we wrote the institutional trading wave and we brew significant businesses there，but in 2018 and 2019, the crypto trading markets suffered a lot, they declined very significantly.
The business is that we had in those areas were no longer as profitable or competitive as they were during the whole market. So we made a decision at the same time in 2018, we launched usdc over the next year 2019.
Usdc was growing very fast，and a lot of different players in the industry were starting to adopt it and support it. So we need a decision that the vision we originally had was finally arriving and we could finally execute those ideas and having these crypto trading businesses was a kind of distraction and expensive.
So we put all of our energy, all of our engineering, of our new product development，around this idea of a new kind of business banking and platform service for the stablecoin-based finance and commerce. And so we looked at that and said over the next three years, five years, that’s gonna grow very large that that’s going to be something that mainstream people，mainstream businesses will want to use.
It’s not just like people speculating on. And so we really felt like it was something that we could build a system sustainable business on.
Q5. Compared with usdt, what advantages does usdc have and especially in terms of regulatory compliance?
Jeremy Allaire: The first is that it was defined as an open standard that multiple companies could implement and support. And so we created a separate governing body called center consortium with Coinbase，the largest crypto company and we wanted to define governance over the stablecoin so that governance included a whole set of regulatory, I think, saying requirements for the issuing of usdc it was a whole series of it’s information security around the technical operations of the stablecoins.
It was also the transparency. It is both regulated, but also audited. And this is very important. If you are a dollar token holder, it’s very important that the individual knows that the dollar token is actually redeemable for $1 and that it is fully reserved. And so we have a monthly statement from one of the largest global accounting firms in the world. That ensures that the amount of usdc in circulation is fully reserved by the us dollars and that those us dollar assets，our store in a segregated account, the largest us dollar banking institutions in the world.
So it is something that can give the token holder a lot of confidence. The other thing that is different is that it really works like you can go to Circle and Coinbase and you can always convert it for $1.
You can access it as a business from bank accounts in almost a hundred countries. So it’s trusted, it’s reliable, it’s transparent, it’s regulated. It works really well. So I think that is what has made it really different and why it’s become the fastest growing regulated stablecoin.
Q6. How about the financial and operational transparency of circle and the usdc?
Jeremy Allaire: The transparency reports we publish every month, and so if you go to the website for the governance of usdc and you can see the transparency reports.
Every month we have the different policies like the center reserve policy that we are public about. We have the center multi-chain policy, which is a new policy that will allow usdc to operate across multiple blockchains. We talked about the next blockchain, which will be the algorithm blockchain, which is really very well designed for high performance, low cost, highly secure payment transactions.
So we have a lot of transparency there. We also will be bringing in many more community members into the process of the evolution of the usdc so we really see the center consortium as providing a kind of community process.
Because now so many different stakeholders, developers, companies are depending on this and we want to have many voices at the table to how to influence the future of this protocol.
Q7. Does usdc have other applications besides hedging (value preservation)?
Jeremy Allaire: Yes, absolutely. So over the last year and then in particular, over the past six months, we’ve seen significant acceleration in the different use cases for usdc we’re seeing usdc used in payments in business, in peer to peer consumer payments.
We’re seeing usdc used in lending products. One of the fastest growing uses of usdc is as a lending and borrowing asset. We’re seeing a trade finance applications that are using usdc digital games, online games, market places like e commerce market places, so we actually have on circle.com there is, a section of our website, called use cases and it talks about all the different use cases that we’re seeing for the use of these digital dollars.
I think this is a very exciting time because the early use of stable coins was for like trading and hedging. But now it’s really becoming useful for many，many other types of payments and value exchange. And we think that will just accelerate and grow.
Q8. Apart from Circle, the main way to get usdc is from Coinbase. Jeremy Allaire: As we all know, Coinbase does not support the registration of Chinese users, and Circle, which originally supported Chinese users, stopped its service to Chinese users early because of policy reasons. How do you plan to expand the access of Chinese users to USDC?
Circle’s business now with business accounts and platform services is we’re really more like a business to business than to consumer. So we are providing services to other businesses who provide services to other consumers. We through that expect there to be many Asian companies that will build services for individuals that are built on top of circle’s platform and that use usdc and which can provide access to Chinese customers.
So I think the important thing is that the companies who are building on top of our platform and offering services to Chinese customers that they’re doing that legally. It is an area where we see a lot of demand.
I know that many otc businesses in Asia, very support usdc and in fact, I think they prefer usdc because it feels more I trusted. So I think there are many kind of the distribution channels that can become available.
Q9. In the future, do you think cryptocurrency is more like a value storage medium or a means of transaction?
Jeremy Allaire: I think that there are many different types of crypto assets and they each have very different roles and characteristics.
I think our belief is that the most popular application of is going to be as a kind of payment and settlement，medium of exchange. Using stablecoins. So this year stablecoins have become the most widely used blockchains and that seems to be continuing to grow as more and more mainstream digital wallets, consumer fin-tech products adopt support for stablecoins.
I think you’ll see that stablecoins as a payment medium will grow and be the most popular application. Now that the there’s a combination of capabilities though smart contracts with stablecoins，allowing to potentially build other types of financial service.
This that are not just for payments that are can be, for example, in lending and borrowing or in investment contracts or debt contracts or in trading voicing. There’s many types of use cases that need the stablecoins.
And so I think in general, these types of financial applications will grow in addition to the payment usage. However, I believe that the store value will also remain a very significant part of the use both with the non-sovereign digital currencies like bitcoin, which I think will continue to be very strong store of value, but also like digital dollar stablecoins. Many the demand for digital dollars has grown in the last four months during the pandemic. Because more people around the world want to hold dollars. And in fact that they would like to hold digital dollars that they can use on the internet and send and receive instantly cheaply securely.
And so for many markets, that’s very attractive. And so they are sort of the digital gold, a store of value like bitcoin and then there’s the digital dollar store value which is interesting as well. But I can see, for example, the digital assets that represent a Chinese government bond could also be a great digital asset that people want to hold as a store of value.
Q10. Usdc will be released on Algorand chain, why Algorand? What will the combination with Algorand blockchain bring?
Jeremy Allaire: We look at the adoption of USDC was very focused on enabling it to be used in what I call everyday payments. Payments that could support a small transaction, a transaction for less than $1 or large transactions. But right now， there are real scalability limits to Ethereum.
And the Ethereum network is becoming more congested. It is becoming more expensive to have a transaction settle. So we’ve been very interested in supporting stablecoins on blockchains that are designed with payments in mind. And there are a number of blockchains that can support higher throughput. Some are designed for things like games, summer or design。 Yeah, for other characteristics, but Algorand as a 3rd generation blockchain, a number of things that we really like，it has obviously very high throughput it doesn’t rely on a kind of a delegate proof of state.
So many of the high throughput blockchains are delegated proof of state where you have the super，super nodes that are elected. It can a kind of concentration of power and it’s not really clear who is behind and what algorithm is done with their validating nodes.
Built a consensus model that is truly random. It uses a random election method，which is like the beacon model of the Ethereum 2.0. It is completely fair and it allows for a consensus model that is the security model. The algorithm foundation and the algorithm team of Algorand are building a lot of features that are really important for payments and finance. The building controls into the token standard.
Better are things that financial applications would really benefit from. They are our building architectures that will allow for the movement of kind of private chains and public chains together，which we think will also be a popular use case. But we want USDC to be able to support thousands of transactions per second in the near future and to so with the USDC for algorithm that we’re working on. We will make usdc available on algorithm.
We will provide a service that will allow wallets and exchanges and others to see easily and instantly a swap between USDC on Algorand and USDC on Ethereum. You can have a wallet where someone who has a an algorithm wallet could send to an Ethereum address and the circle a US DC token bridge will allow that to happen very easily.So that’s a new a plan that will be making it available to the industry to provide that cross-chain interoperability for USDC as well.