Stablecoin issuer Circle Gets $400 Million Boost from Blackrock and Others

USDC is seeing high adoption but remains controversial

Circle is trying to do what Zuck could not with Libra. Make Stablecoins part of the future of money.

What is the future of stablecoins in the United States? The total market capitalization of stablecoins currently stands around $180 billion, up from roughly $38 billion a year ago, Coin Metrics data compiled by The Block show as of February, 2022. By now it’s likely in the $210 billion area I would estimate.

So what’s going on with the chatter about regulation? United States regulators are concerned about the systemic failure of top stablecoins, leading many to believe this cryptocurrency will be the first one to see regulation.

Circle Internet Financial Ltd. has conducted a number of “state visits” to the U.K. in the last year, flying over its most senior executives to engage with government, regulators and industry bodies with a view to expanding its business in the region. While Facebook is rumored to be making yet another push into a “Zuck Buck”, it’s hard to distinguish fact from fiction.

Most issuers say they back their coins with traditional assets that are safe and liquid, allowing crypto investors who hold them to access their value at any time they wish. But “right now, no one can assure you that will happen,” Yellen said Thursday. “In times of stress, this uncertainty could lead to a run.” With inflation crashing countries like Sri Lanka, Venezuela and Peru among others it’s a pretty wild time.

Circle is Doing Just Fine

In February, 2022 - Circle, the company behind the USDC stablecoin, doubled its valuation to $9 billion in updated SPAC deal.

Now in April, 2022 - The Boston-based payments and financial infrastructure company is getting $400 more million in funding. They call them dollar digital currencies (not stablecoins). A while ago people tried to call crypto, digital assets.

We have to note that Tether’s USDT is disregarding Ukraine’s pleas to halt Russian use.

They are also applying for a bank charter.

So this recent $400 million by BlackRock and Fidelity headlined the stablecoin issuer's latest funding round, which follows a $440 million raise last May. You can imagine how this raises its “market cap” crazy quickly. All based on the supposition that Bitcoin reaches 100k soon, among other things.

El Salvador has become the first country in the world to make the cryptocurrency Bitcoin legal tender. A world of “internet money” they call it. Is it a stablecoin, a dollar digital currency or some kind of internet money eh?

Circle thinks USDC should be a core infrastructure of business apps. Institutional player are getting involved so there is getting serious. How Circle and BlackRock are in bed together, is probably complicated.

Threat to Digital Dollar Stablecoin Markets

A leading member of the Senate Banking Committee introduced a bill in early April, 2022 to create a three-pronged regulatory framework for stablecoin issuers in the U.S.

Sen. Patrick Toomey (R-Pa.), the ranking member of the committee, announced the "Stablecoin Transparency of Reserves and Uniform Safe Transactions Act of 2022," dubbed the Stablecoin TRUST Act for short, as part of an effort to specify how the U.S.'s different regulatory agencies could approach companies issuing cryptocurrencies whose prices are pegged to the U.S. dollar or other assets.

• Circle Internet Financial said it raised $400 million in a funding round that included investments from BlackRock, Fidelity, Marshall Wace LLP and Fin Capital.

• The issuer of the USDC stablecoin, currently with $51 billion in circulation across multiple blockchains, is going public through a SPAC (special purpose acquisition company) merger.

• Now they want to become a Bank, with multiple public blockchains that need to be worked out on a regulatory basis. They want to become a Reserve Bank.

The firm has partnered with big names from the world of traditional finance in recent weeks. Circle said late last month that BNY Mellon would serve as a primary custodian of the assets backing USDC stablecoins. Tether and USDC feel like a Stablecoin duopoly.

Stablecoin has helped popularize crypto in a central way. According to some experts, the rise of stablecoins helped make other cryptocurrencies more valuable by giving traders a ‘stable’ place to put their money amid the inherent volatility of crypto markets. These market caps of digital assets are somewhat speculative, in my opinion. Not to mention volatile and subject to regulation as they get bigger.

So when and how could they be likely regulated? As written, the discussion draft of the bill would define a "payment stablecoin," authorize the Office of the Comptroller of the Currency (OCC) to create a new license specific to stablecoin issuers, allow insured depository banks to issue payment stablecoins and address state regulatory oversight of this segment of the crypto industry.

Circle while partnering with institutions wants to create the rules as it goes along, breaking new ground perhaps for other stablecoins in the process. Who says blockchain wouldn’t change the world? According to Tuesday's press release, BlackRock will function as "a primary asset manager of USDC cash reserves." Gosh that’s reassuring.

Meanwhile Facebook tries to Clone Roblox Money

Meanwhile Emperor Zuck just never gives up. Zuck Bucks, seemingly named for Meta founder, chairman, and CEO Mark Zuckerberg, are “unlikely” to be a cryptocurrency. “Instead, Meta is leaning towards introducing in-app tokens that would be centrally controlled by the company, similar to those used in gaming apps such as the Robux currency in popular children’s game Roblox,” according to the FT.

Blackrock is the world’s largest asset manager will also act as the primary manager of USDC reserves to help explore the stablecoin’s use in capital markets. Circle sounds like a tool of some elite or shadow deep state mechanics of how Capitalism really works. It certainly does not sound like a decentralized revolution to democratize money.

Meta hasn’t totally distanced itself from blockchain products, as the company is also looking into posting and sharing NFTs on Facebook. Meanwhile for the Creator Economy in VR, Zuck wants to pay creators to make cool stuff in Halo Worlds.

Meta / Zuck announced 52.5% of each sale to the Creator and said "We think it’s a pretty competitive rate in the market." The reality is Zuck plans to pay and share revenues with Creators among the least of any app or creator-first platform in existence today.

Now we live in a world where the ultra-rich own most of Bitcoin and crypto, and we have powers like Circle and Zuck Bucks jostling for the future of banking and the Creator Economy. I remain awed and wowed by this Web 3.0 universe about to form around me and immerse me in a pleasant sensation of VR forever.

If you want to support me so I can keep writing, please don’t hesitate to give me tips, a paid subscription or some donation. With a conversion rate of less than two percent, this Newsletter exists mostly by the grace of my goodwill (passion for the Creator Economy) & my own experience of material poverty as I myself pivot to the new world.

Anyways I hope you enjoyed the topic, that’s all for today.