Circle to Base International Operations From New Bermudan Entity

Samuel Haig

On July 22, Circle announced that it has launched a new subsidiary in the self-governing British Overseas Territory of Bermuda.

The company stated that it plans to “serve non-US Poloniex customers” from its Bermuda operations, with the transitional process planned for the coming weeks. Despite the shift toward its new Bermudan entity, Circle plans to continue its existing operations in the United States (US), Hong Kong, the United Kingdom, and Ireland.

Circle was granted a ‘Class F’ license under the Bermudan Digital Assets Business Act of 2018 (DABA), with the Circle describing itself as “the first major crypto finance company” to receive the permit. The company plans to expand the staff at its Bermuda office to more than 30 within the next two years.

Circle also expects that non-US customers will be able to use Poloniex via the Circle International Bermuda entity in “the near term.”

Circle Praises Bermudan Cryptocurrency Regulations

In a statement, Circle commented Bermuda’s regulatory apparatus pertaining to cryptocurrencies, describing the DABA as “an exceptionally well designed and comprehensive framework” that recognizes that “digital assets represent a new class of assets that cannot be shoehorned into legacy regulatory frameworks.”

The company added that the DABA “enables technical and business innovation” while also enforcing “high regulatory and supervisory standards,” including “one of the strongest regimes in the world for anti-money laundering (AML) and combating the financing of terrorism (CFT) in ways that are compliant with Financial Action Task Force (FATF) standards.”

Gus Coldebella, Circle’s chief legal officer, told Forbes that the company considered several different jurisdictions before deciding that Bermuda was “a perfect fit.” Mr. Coldebella stated:

Under the DABA license, Circle will be able to operate a suite of regulated crypto financial services for our international customer base, including expanded digital asset product offerings.

Circle also commended the Bermudan premier, David Burt, and officials from the Bermuda Monetary Authority for their “embrace of the digital asset industry,” adding “We’re confident that working with a visionary and highly-respected government partner will open the door to more growth and innovation.”

Premier Burt welcomed Circle to Bermuda, stating: “We look forward to working closely with Circle [...]  We believe we have established a top standard of regulatory confidence which will help guide other jurisdictions on how to appropriately manage the risks associated with this industry while reaping the rewards offered by the efficiencies and opportunities that will be driven by the digitization and democratization of finance.”

Zuckerberg Says Libra Can Boost Facebook's Ad Revenue, China Sees It as a Much Bigger Deal

Facebook CEO Mark Zuckerberg has, during a shareholder meeting, explained how the Libra cryptocurrency project will help the social media giant make money. China, on the other hand, published a book addressing the challenges Libra poses, arguing it could become the future of world currency.

In a transcript posted by Thomson Reuters, we can read Zuckerberg replied to a question asked by a shareholder on how Facebook will be making money off of the Libra cryptocurrency project. Zuckerberg responded by going into Libra’s potential impact on e-commerce on Facebook, and its potential impact on advertising revenue.

According to the social media giant’s CEO, Facebook does not charge a set price for ads and instead works with a bidding system, where every business trying to advertise will bid to compete for ad space. The system, Zuckerberg said, allows them to get the “lowest possible price.”

He added that combining ads with an effective payment tool such as Libra can benefit businesses further as it could make commerce more efficient:

If we can make commerce be more effective for businesses if when they run an ad, somebody who clicks on that ad is now going to be more likely to buy something because they actually have a form of payment that works that’s on file.

Advertising on Facebook, as such, becomes more worthwhile for businesses, which could in turn see them bid higher on ads and increase overall ad prices. This would effectively boost Facebook’s 0s advertising revenue.

Zuckerberg also reiterated other advantages of Libra, pointing out the payments infrastructure “hasn’t been updated in a very long time.” China, which has plans to launch its own digital currency called DCEP, sees Libra as more than a way for Facebook to make money.

Libra Could Hit China’s Efforts to Increase Yuan Influence

In a book published by the Central Party School of China to educate government officials on digital currency and propose policy measures to deal with emerging challenges like the Libra project, experts argue the latter is an excellent example of a public-private partnership and has the potential to become the future of world currency.

This would mean, according to the book titled “Discussing Digital Currency with Leading Officials,” that Libra could get in the way of the Chinese government’s attempt to increase the influence of the yuan.

Hongzhang Wang, former chairman of the China Construction Bank and one of the authors on the book’s preface, said in a recent article:

China originally relied on mobile payment to get ahead, but now Libra has the potential to change the game again.

Wang added that this would allow companies in the U.S. to build a digital currency system that could “threaten or even surpass” Alipay and WeChat Pay using blockchain technology.

Featured image via Unsplash.