Crypto Investment Firm Circle Seeking $250 Million Ahead of Possible IPO

Omar Faridi
  • Circle Internet Financial is planning to raise an extra $250 million to fund ongoing expansion operations.
  • Circle's last valuation was nearly $3 billion, and to date it has raised $246 million.

Founded in 2013, Boston-based fintech firm Circle Internet Financial is reportedly looking to raise $250 million in order to further expand its operations and product offerings.

According to a report published on March 2 by The Information, Circle’s fundraising round will consist of equity and debt financing. To date, Circle has managed to raise approximately $246 million from several prominent investment firms including giant Wall Street investment bank Goldman Sachs, the Digital Currency Group, and Pantera Capital.

In its most recent Series E fundraiser, Circle was able to acquire $110 million in investment from a diverse group of investors at a valuation of almost $3 billion. Circle’s decision to seek additional funding before its initial public offering (IPO) may be part of the company’s business strategy to gain a larger market share on San Francisco-based crypto exchange Coinbase and other competing crypto-related firms.

At present, Circle’s management operates a number of subsidiaries including Circle Invest, Circle Trade, and digital asset exchange Poloniex which was acquired in 2018.

In early January 2019, Circle revealed that it facilitated the trade of approximately $24 billion in cryptocurrency through its over-the-counter (OTC) trading desk. According to an official blog post published by Circle’s founders, Sean Neville and Jeremy Allaire, the company helped process more than 10,000 OTC trades “across 36 different cryptoassets” with “nearly 600 distinct counterparties.”

Circle's Founders Anticipating Further Incremental Growth This Year

As explained in Circle’s blog, the payments technology firm offers liquidity to large cryptoasset exchanges, cryptocurrency miners, and blockchain project developers. The crypto-focused personal finance firm also provides liquidity services to the “new cryptoasset investor base of venture capitalists, crypto funds, hedge funds, and family offices” across the globe.

Explaining the American fintech firm’s business strategy and overall approach to the crypto sector, Circle’s blog post mentioned: 

This year, we anticipate further incremental growth in institutional adoption catalyzed by stablecoin usage, advancements in institutional custody solutions, increasing regulatory clarity particularly in the [United States], and improvements and innovation in core crypto infrastructure.

Fighting Market Manipulation, Seeing Crypto As "Transformative"

On January 23, Circle CEO Jeremy Allaire told world leaders at the World Economic Forum in Davos, Switzerland:

We see crypto as much more transformative even [when compared to the world wide] web. It will have a far greater impact on our civic institutions, our economic institutions, and on the nature of the firm itself.

As CryptoGlobe reported recently, Circle is also planning to fight crypto market manipulation tactics including insider trading and “pump and dump” schemes through advanced market surveillance tools. The payments technology firm reportedly intends to use digital financial services firm Nice Actimize’s tools to help prevent exploitative activities in the volatile crypto market.

Global Task Force, U.S. Tax Agency, SEC Dominate Crypto Headlines

Regulations are ruling the crypto headlines so far this week. Over the past 24 hours, we’ve learnt the Financial Action Task Force (FATF) is reportedly set to finalize new international standards for regulating cryptocurrency firms next month. The commissioner of the Internal Revenue Service (IRS) has stated his agency has “made it a priority” to issue more comprehensive crypto tax guidance “soon.” Finally, the U.S. Securities Exchange Commission (SEC) announced it would delay, once again, its decision on the VanEck and SolidX Bitcoin exchange-traded fund (ETF) proposal.

At the time of writing, bitcoin (BTC) and ether (ETH) are trading at $7,945.4 and $252.9; a 0.54% and 0.83% jump over the past 24 hours, respectively. As for the MVIS CryptoCompare Digital Assets 10 Index, it is currently tracking at 3,822.7 (-0.6%).

Global Standards for Regulating Crypto Firms Next Month

According to reports from CoinDesk, the FATF is set to finalize new international standards for regulating cryptocurrency firms next month. These standards, they report, are widely expected to subject crypto exchanges, wallet providers, and other businesses to the “travel rule” – a colloquial term given to a rule found in the Bank Secrecy Act (BSA) that requires all financial institutions to pass on certain information to the next financial institution, in certain funds transmittals involving more than one financial institution.

Introduced in 1996 in the U.S., the “travel rule” is designed to help law enforcement agencies detect, investigate, and prosecute money laundering and other financial crimes by preserving an information trail about persons sending and receiving funds through funds transfer systems. The arrival of such international standards would go beyond the basic know-your-customer requirements that are widely enforced in the crypto space at present.

IRS Commissioner: More Detailed Crypto Tax Guidance ‘A Priority’

According to letter from IRS Commissioner Charles P. Rettig dated May 16, the agency has “made it a priority” to issue a more comprehensive tax guidance for cryptocurrencies. The Commissioner’s letter was written in response to a request from 21 Congressmen to provide clarity on tax treatment in relation to cryptocurrency holdings.

In 2014, the U.S. tax agency issued a guidance for cryptocurrency. In his May 16 response letter, Rettig revealed the IRS will “soon” issue more robust guidance. “I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions,” the Commissioner wrote.

SEC Delays Decision on VanEck SolidX Bitcoin ETF

The SEC announced the postponement of a decision regarding the VanEck SolidX bitcoin ETF proposal. The postponed ETF proposal was initially filed over a year ago. In January – amid the U.S. Government shutdown – it was withdrawn, only to be resubmitted later that month. On March 29, the commission delayed the joint proposal for the first time. The SEC must announce its decision – or, for the final possible time, postpone its decision – on the proposed bitcoin ETF no later than August 19.

Notably, the U.S. investor watchdog is seeking comments from the public in relation to the proposed VanEck SolidX bitcoin ETF. To guide commentary, they included fourteen questions in Monday’s filing. Comments must be submitted within the following 21 days, whilst rebuttals to said comments are due within the next 35 days.