Circle is the financial technology company behind USDC, a stablecoin pegged to the U.S. dollar, and its business today revolves around issuing that digital currency, earning interest on the reserves backing it, and trading crypto assets rather than running the consumer payment app it started out as.
From Consumer App to Stablecoin Powerhouse
Founded in Boston in 2013 by Jeremy Allaire and Sean Neville, Circle began life as a bitcoin trading and payments app called Circle Pay. It picked up a New York BitLicense in September 2015, letting it operate a bitcoin exchange under the state's rules, and later landed an electronic money license from the U.K.'s Financial Conduct Authority. Circle Pay pivoted in December 2016 toward what the company called global social payments, essentially peer to peer transfers, and by 2017 it had built a loyal following among younger users in Europe. Circle has said that 90 percent of its European customers that year were under 35, and 60 percent were under 25.
That consumer chapter didn't last. Circle shut down its cryptocurrency wallet service in 2016 and pulled the plug on the Circle Pay apps entirely in June 2019. The company had also backed the Poloniex exchange through a rough patch in 2017 before spinning it off in 2019. By 2020, Circle had redirected its energy toward treating its stablecoin as what it calls programmable dollars for business use, a shift that set the stage for its next act. In 2021, Concord Acquisition Corp., a special purpose acquisition company, took Circle public in a $4.5 billion deal under the ticker CRCL.
What Actually Happens Inside Circle's Blockchain Network
USD Coin, or USDC, launched in 2018 after Circle raised $110 million in venture funding to build a dollar backed stablecoin on the Ethereum blockchain. Each USDC token is meant to track the value of one U.S. dollar, giving businesses and individuals a way to move dollar value across borders without touching a traditional bank wire. In May 2021, Circle brought in another $440 million from institutional and strategic investors to keep building out that infrastructure.
Circle also runs an open source project called Centre, named for the Cent Routing Exchange protocol underneath it. Centre uses an Ethereum based token called CENT to let digital wallets holding different currencies send funds to one another, and it's built with an eye toward helping financial firms satisfy Know Your Customer and Anti Money Laundering rules through built in disclosure features. The system already supports transfers across many countries. In practice, that means someone in the U.K. could convert British pounds to Korean won and send them straight to a wallet holder in Korea. Centre currently operates on Ethereum but was designed with an eye toward running on other blockchains down the road.
Where the Money Actually Comes From
Circle doesn't charge users fees for transfers, and its apps have always been free to download. So how does a company built on giving away its core product turn a profit? Trading is one answer. Circle buys and sells bitcoin and ether on over the counter markets and major exchanges, acting as a market maker and providing liquidity to institutional clients. Back in August 2017, Allaire claimed on Twitter that Circle was the second largest crypto asset trader in the world, and by then the company was processing roughly $1 billion in transactions every month.
The bigger and more durable revenue source now is the interest rate spread on USDC reserves. Circle holds reserve balances on behalf of customers, invests that money, and pays depositors a portion of the return while keeping the rest for itself. As USDC has grown, so has this spread income, and it has become central to Circle's business model as a public company. Neville hinted at this arc back in a 2014 blog post, writing that Circle intended to build revenue generating products eventually, but that the first basic product needed to stay free.
Competing With Ripple and Chasing Global Payment Flows
Circle pushed into China starting in 2016, aiming to link Chinese consumers to the broader world by making it easier for money to flow in and out of the country, including for something as everyday as helping Chinese students abroad handle transfers home. That international ambition puts Circle in loose competition with Ripple, another company using blockchain based tokens to cut the cost of cross border money movement. The two aren't chasing identical customers, though. Ripple has built its business around partnerships with banks, while Circle's roots are in stablecoin issuance and crypto market making, a distinction that still shapes how each company grows today.