Jeremy Allaire breaks down how stable coins are becoming integrated into the traditional financial system and to get a sense of how Circle is handling the added scrutiny that the entire industry is facing as a result of the Russia/Ukraine crisis.
Can you give us a short overview of Circle’s main lines of business?The most foundational part of the business is what we call our stablecoin market infrastructure business, which is best understood as the USDC product. We think about that as market infrastructure that is made available to any kind of market participant to integrate with and to use. It's something that end users and developers and people building products and services can just integrate into their products.
The next big piece is what we call our transaction services business. Maybe before even getting into that, at the core, we offer something called Circle Account, a free account available to businesses of all sizes that provides a way for people to connect banking, store and hold USDC, and convert and redeem it across multiple blockchains. With the free account, there’s also additional value-added products that we charge for.
A digital currency like USDC is very, very different. USDC is a stored-value payment instrument regulated by banking supervisors throughout the U.S. It has been since day one roughly four years ago in 2018. It’s the same regulations that regulate PayPal and Square Cash, and Apple Pay and Venmo. With all these, when you put dollars in, you get a 1:1 digital representation that you can then use in a digital application.
Regarding centralization concerns, Circle is a regulated financial institution that requires that certain controls are put in place. We have a hybrid model of operating on decentralized infrastructure. But there’s a centralized issuer, and that's a feature for a lot of people even if it might be a bug to others. If you look specifically at the history here, there are an extraordinarily limited number of instances where this has happened.
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