Stablecoin Issuer Circle Secures $400 Million Funding Round

Key Insights

• BlackRock will also serve as asset manager for stablecoin reserves.
• Stablecoins have come under increasing scrutiny from U.S. financial regulators. 
• USDC supply has grown by 355% in a year and is now more than 50 billion.

Institutional investment giants BlackRock and Fidelity led the $400 million funding round for Circle Internet Financial Ltd., the issuer of USD Coin (USDC). Other investors included Marshall Wace and Fin Capital, according to the announcement on April 12.

BlackRock (BLK) has also entered into a wider partnership with Circle, which includes exploring capital-market applications for the USDC stablecoin. It will also serve as a primary asset manager for the USD Coin’s cash reserves.

The new funding round, which is expected to close at the end of Q2, promotes Circle’s continued strategic growth as demand for dollar-pegged digital currencies and related financial services continue to scale globally.

Stablecoin Demand

Jeremy Allaire, co-founder, and CEO of Circle commented on this growth which is evident by observing USDC supply increases. Since the same time last year, USDC supply has grown by 356%, underlying that demand for stablecoins.

“Dollar digital currencies like USDC are fueling a global economic transformation, and Circle’s technology infrastructure sits at the center of that change. This funding round will drive the next evolution of Circle’s growth,”

BlackRock’s chief operating officer Rob Goldstein and global head of ETFs and index investments, Salim Ramji, expressed agreement in a memo to employees on April 12. We believe digital assets and blockchain technologies will become increasingly relevant for BlackRock and our clients, they stated.

Stablecoins have come under increasing scrutiny from U.S. lawmakers who are growing concerned over their reserves or backing. A physical dollar should back each coin though full audits for the industry’s leading stablecoin issuer, Tether, have yet to materialize.

Circle will now be one step ahead of its rival, with BlackRock managing those cash reserves.

Ecosystem Outlook

Circle is the world’s second-largest stablecoin issuer, with a USDC supply of 50.6 billion. Rival Tether (USDT) currently has a circulating supply of 82 billion though it has lost market share to Circle and other stablecoins over the past year or so.

The total supply of stablecoins is around $186 billion, which is approximately 10% of the entire crypto market capitalization, according to CoinMarketCap.