Circle gets $ 25 million from DCG to drive the USDC stablecoin

The USDC Circle supporter is partnering with Genesis Trading in a $ 25 million deal aimed at pushing stablecoin towards the fintech masses.

The evolution of stablecoins

Announced on Wednesday, the funding comes from Genesis' parent company, the Digital Currency Group (DCG). The new partnership and funding will improve the Circle suite of products and launch new ones, companies say.

It's all geared towards further USDC yields and lending services ahead of traditional adoption. "We are seeing the evolution from stablecoins going from being something exclusively in cryptocurrency markets to a wider range of use cases in payments and commercial and financial applications around the world," said Circle CEO Jeremy Allaire in an interview.

"The logical evolution is that stablecoin-based loan markets will grow significantly." Dollar stablecoins are on the rise, with around 12 billion now in circulation. Meanwhile, Genesis has seen a marked increase in the percentage of USDC in its loan portfolio, said Michael Moro, CEO of Genesis.

Doubling

In the past, Circle raised $ 246 million in seven rounds of funding, with DCG being a investor regular in the company since 2014. The USDC stablecoin was born in October 2018 from a partnership between Circle and the San Francisco Coinbase-based cryptocurrency exchange, nicknamed the CENTER consortium.

Allaire was unable to say specifically whether Genesis or anyone else could join the CENTER consortium soon, but said expansion plans are underway. "Right now, Circle and Coinbase are the two members of the CENTER consortium, and what I call the board of directors for the governance of the stablecoin standard itself," said Allaire.

"We are expanding participation in the ecosystem at CENTER and involving a much wider range of participants in the direction of using USDC as a standard."

DeFi vs. CEFI

Decentralized finance (DeFi) loans are all the rage right now and stablecoins like USDC are being sucked in by platforms like Compound and Maker at a rapid pace, which presents something different from the more traditional world of encrypted lending.

The high-net-worth clients, family offices and institutional actors that Genesis typically serves are surely following everything that's going on in the DeFi space, Moro said, but these types of investors need to know who the counterparty is at the other end. of a contract.

"The idea that smart contracts are your counterpart is still a new and misty idea for a company's legal and compliance arm," said Moro. "That's not to say that DeFi can't make its way into corporate America, but it's a long way from now, in my opinion."

There are possible crossover areas, involving crypto hedge funds that can manage counterparty risk in exchange for price arbitrage opportunities, Moro added. Allaire, for its part, believes that the issue of a transparent and regulated dollar-based stablecoin (USDC is controlled by the global accounting firm Grant Thornton) will win in the long run.