Name: Balancing the Ledger: Circle CEO Talks Seedinvest Acquisition, Fundraising Rumors, and Facebook
Uploaded: 2019-03-18
Duration: 10 min 28 s
Description: Jeremy Allaire stopped by Fortune's studios to chat with Robert Hackett.

[ MUSIC ] Welcome to Balancing The Ledger where tech and finance intercepts. I'm Robert Hackett and I'm here today with Jeremy O'Leary the co- founder and CEO of Circle. Thanks for coming on the show Jeremy. Thanks proud to be here. All right, so tell me a little bit, for the people who don't know, what is Circle? What are you guys working on? Sure, so Circle is what we refer to as a crypto finance company. We've grown a lot, we've been around for about six years. We have a portfolio of products at the kind of retail end user level, like a payment system that's built on Blockchain, [ UNKNOWN ] simple investment products for people to invest in different crypto assets. We run one of the larger exchanges in the US called Poloniex. We also at the other end have an institutional business called Circle Trade where we are a major provider of liquidity and over- the- counter trading. Service for the most popular digital assets. Some recent things, we launched a stable coin called US Dollar Coin through a consortium that we formed with Coinbase last fall. And that's a price stable, US dollar pegged token used for payments and settlements and in a variety of other contexts. We recently announced the Closing of the acquisition of Seedinvest. Seedinvest is the largest equity crowdfunding platform in the US. They've been at the forefront of implementing ways for startups and growth companies to raise capital directly from investors over the Internet. So you mentioned a bunch of things in there. I wanna pick apart each one. Okay. [ LAUGH ] But first, we'll start with Seedinvest. This acquisition just closed. What is the significance of this purchase to your company? Yeah, so when we founded Circle we were really excited about the idea that on top of these public chains eventually you would be able to issue assets. And then write contracts through smart contracts around those assets. And it took several years for that to become technically possible. A theorem was sort of the first platform to make that possible. And starting about a year and a half ago we got very excited about this idea that, investment contracts could be tokenized and that a whole batch of digital assets would become tradable. The sort of crypto exchanges are like an early version of that. After we acquired plenty acts. We knew we wanted to get into the regulated sphere of issuing securities and enabling investors on the internet to invest in securities, but doing it in a highly compliant way. So SeedInvest has built out a crowdfunding platform that has helped hundreds of companies raise hundreds of millions of dollars by issuing securities over the internet, marketing them to investors on the internet, and letting both Accredited investors but also critically, unaccredited investors invest in those companies. So it operates a broker dealer and it now is part of Circle of course. We're gonna look at ways that we can bring the benefits of digital assets, crypto technology, blockchains, into this whole area of issuing securities on the internet Does that certification as a broker dealer extend to Circle broadly, or does it remain in that one sort of business? So the business is the SeedInvest business, and that's what it's sort of authorized for activity. I think when we look at other things that we might wanna do with that, In the future, we're gonna work with our partners in government, our partners in agencies like fan Ratelle really figure that out together. And it's very clear that there's a lot of major new technology, that makes a lot of new use cases possible, and sort of working closely with our regulatory partners to make sure that's all done in a way which continues their mandate which is protecting investors making sure markets are, Safe and orderly, and so, digital security, which is a very new thing, is new, so we've got to work through those details. And eventually, we've got a lot of ideas on what we wanna do, and we'll evolve accordingly. Between your cryptocurrency exchange ptolemics and also your over the counter desk, which has done very good business How is that faring now that there is going to crypto market downturn? Yeah, well it's down. [ LAUGH ] Okay. Yeah I mean affectively, our marketplace business or markets business centre in our trade business are very correlated to the market activity, so when there's volatility there's more activity. When there's not volatility or prices are down, then volumes are down. So totally correlated there, not a huge surprise that it sort of affects the entire market. I think we pride ourselves on running platforms that are compliant, That are safe, we just actually, I think a third- party announced that we're implementing a market surveillance solution to make sure there's not market manipulation happening. So we really I think go out of our way to make sure it's a safe, compliant platform as well What kind of runway are you guys working with over at Circle? Reports say that you are in the midst of a fundraising round right now. So we don't comment on rumors and speculation, obviously. We had a very significant growth year last year, even though there was a crypto market, you know, bear market. So we managed to grow. And we grew our volumes, our customer base, our revenue, etc. Again, can't comment on any specific kind of financial plans. Reports have said that shares in Circle have been trading at a discount on secondary markets. That the valuation, which was at $ 3 billion during the last fund raise has come down to something more closer to a $ 1 billion or maybe even less What's happened there? So we don't comment specifically on share price but that was also misreporting. People, there are secondary trading platforms. People list things that they're offering. Shares added could be former employee. It could be those kinds of things. That doesn't mean they're actually trading. So Again, can't comment on specific transactions or specific prices, things like that, but the way that was characterized was inaccurate. What's your take on Facebook, which is apparently spinning up a stable coin of its own that's gonna be across its messenger services, WhatsApp, Instagram Messenger, and Facebook Messenger? I think it's a great, it's a great sign that major Internet companies are starting to looking at issuing crytocurrencies. That's very, very positive in our view overall. The approach that we've taken is to create a consortium model. And when we think about something like a standard for how fiat money works on the Internet, it's really critical that it's an open standard that lots of companies can implement that has a self governance mechanism around it that can evolve both as a technical standard as well as like a membership framework. And that's why we jointly formed the CENTRE consortium with coinbase, and with, and that's off to a very good start. It's now the number two stable coin in the world and has grown a lot in terms of ecosystem adoption and we're just months into it, so it's really early. I think our view is that there needs to be a http for money on the internet, and it needs to be able to have lots of companies participating in it. And I think that approach, an open standards approach, towards consumer approach, that's broad and allows for global participation Is ultimately gonna be much more successful than a single company issuing a currency themselves. I guess we don't really know what form Facebook's coin is gonna take, whether it's gonna be open, whether it's gonna be closed, but. Sure. But What's App has more than a billion users. Absolutely. On the network, you know? What is sort of the competitive advantage? What's the moat for you having gone out earlier with a stable coin to keep such a juggernaut? Off your flanks. Yeah I mean it is unknown exactly what they're doing. I think from our perspective, a base layer of tokenized Fiat money is a really critical pre- condition to a lot of things. Our view is that in the coming years, basically payments will just be a free service on the internet. It'll work the same way as email, as text messaging, as other kinds of data sharing. But the really critical thing and a core reason why we have developed this in the first place is the power of having smart contracting platforms that allow you to build economic arrangements around those [ UNKNOWN ] assets. So build lending relationships, building investment contracts, building really the building blocks for how the economy works are economic contracts. And so It's really critical that the technology not just be a currency that is used for payments but it actually can be part of a broader infrastructure, which can be used to build next generations of the way capital markets work, the way lending works, the way all these kinda financial services applications works And so building on top of a public infrastructure, initially we've built on top of Ethereum, we'll see how that emerges in terms of a next generation of Ethereum or other public chains in the future. I think that's critical. Again, we don't know what Facebook [ UNKNOWN ] are but what we do know is that in the history of the Internet Open platforms, open ecosystems, open standards, instead of a broad range developers and companies can hold on thrive. And we wanna see that in the open finance movement as well. And I think we're not alone in that, there are hundreds of companies that working towards that. And so we're really aligned with that as well. What predictions do you have for 2019? For 2019, I think we're gonna see a lot of growth in a stable coin adoption. I think we're gonna see some major public change that launched, that are very compelling and could give an indication for a kind of new face of capability and the blockchain space. Which are the most compelling? I don't want to comment on specific names cuz we do run markets in these spaces. But there are I think a lot of very compelling projects there. I think we're gonna see the first movement in things like security tokens where there start to be some compelling initial use cases around those as well. So those are certainly some of the themes that we see. Well thanks so much for joining us, Jeremy. We're looking forward to having you out in Montauk for Brainstorm Finance this summer. Thank you, Robert. Thanks for coming to the studio. Absolutely. I'm Robert Hacket, come to Fortune. com for more Balancing the Ledger. [ MUSIC ]

Balancing the Ledger: Circle CEO Talks Seedinvest Acquisition, Fundraising Rumors, and Facebook

Tech

Jeremy Allaire stopped by Fortune's studios.

Circle CEO Talks Seedinvest Acquisition

Jeremy Allaire stopped by Fortune's studios to chat with Robert Hackett.