Circle (Financial Services Company)

Circle is a Boston-based financial services company that uses blockchain technology for its products. It was started in 2013 by Jeremy Allaire, who previously founded Brightove, a video platform company, and Sean Neville. The company has raised $140 million in funding and is backed by investment bank Goldman Sachs and Chinese search giant Baidu Inc., among others.  

Circle’s website states that its mission is to change the global economy. The company’s first product is an app called Circle Pay. The app was a bitcoin trading exchange. Circle Pay was the first exchange to be granted a BitLicense, New York state’s license for operating bitcoin exchanges.

The UK’s Financial Conduct Authority (FCA) also granted Circle an electronic money license. In December 2016, Circle Pay’s focus shifted to peer-to-peer payments or “global social payments." Circle also launched an open source software project in 2017 to promote payment technology.

Circle’s main product is an app called Circle Pay that enables instant and free money transfer between individuals. The service is similar to Paypal’s Venmo in that it can be used for daily transactions, such as splitting meal costs or making rent payments. 

The Circle Pay app is popular with Millennials in Europe. According to the company, 90% of its customers there are below 35 years of age and 60% are less than 25 years old.  In June 2017, Circle Pay announced the integration of a free money transfer service between the United States and Europe. While announcing the launch, Circle founder Allaire said the company was working towards realizing its vision of no distinction between international and domestic money transfers.  

Circle’s open source project is called Centre and is named after the Cent Routing Exchange protocol it uses. Transfers within the app take place using Centre tokens (CENT), an ethereum token. The project enables transfers between consumer digital wallets that support different currencies. It is also intended to help financial services company comply with existing regulations, such as KYC and AML, by enabling disclosure.

As of 2016, the project currently works in the United Kingdom, Europe, the United States, South Korea, and Philippines. For example, a user in the U.K. can convert British pounds to Korean won and transfer them to a digital wallet user in Korea using the app. 

Centre currently runs on ethereum’s blockchain but is designed to run on other blockchains as well. Allaire has said the protocol’s nodes will consist of payment technology apps, such as Paypal and Paytm. 

Circle’s products are freely available in App stores and the company does not charge fees for transactions or transfers. It makes money through trading of bitcoin and other cryptocurrencies in Over the Counter (OTC) markets and at digital exchanges.

In an August 2017 tweet, Allaire said Circle was the biggest crypto asset trader in the world. The company trades in bitcoin and ether and is a market maker on all major exchanges. It also provides OTC liquidity services to institutions. In the future, it may launch products that generate revenue.

“We will have future, higher-level products that we fully intend to be revenue-generating, but this first basic product needs to be free,” co-founder Sean Neville stated in a 2014 blog post. 

Circle processed $1 billion in transactions and its customer base increased more than tenfold in 2016. It entered China, a massive market for payment apps, in 2017. The company’s focus in China is on “connecting out” or enabling flow of payments going out or into China. As an example, it aims to facilitate money transfer operations for Chinese students studying abroad. 

Circle’s technology and idea of using blockchain-based tokens is similar to that of Ripple, another company focused on reducing the cost of international money transfer. However, both apps target different markets. According to Allaire, their product is targeted at users of payment apps, such as Paypal and Venmo. Ripple is working with banking institutions to implement its technology.