Regulators are beginning to refine their thinking around the currency, and new startups based on the cryptocurrency keep raising money. The latest of these is Circle Internet Financial, which has raised $17 million in a Series B round of funding and just launched a limited release of its first products.
The company is intentionally vague on what those products are, declining to disclose little more than that it is engaged in the same cloak and dagger security measures as its new generation of peers.
“We’re trying to build a global financial services business in a very new market. “We’ve built our own secure vault storage model for the custodianship of consumer digital assets,” said Jeremy Allaire, Circle Internet’s founder, chairman, and chief executive. “It includes several locations all of which are vaulted and secured with multiple levels of access control and armed guards.”
In its attempt to establish the company as the new name in secure bitcoin finance, the Boston-based company resembles another recently financed bitcoin vault startup, Xapo.
But Allaire has a bigger vision for Circle Internet Financial, which aims to create an entire array of financial services products and transaction systems built around bitcoin. “Looking at third party activity [now], they’re buying and holding bitcoin and buying and selling bitcoin as an asset that they’re investing in. But most people aren’t buying and selling bitcoin, they’re depositing funds.”
Using Circle, consumers can deposit local currency whether that is dollars or euro and Ciricle will convert it to digital currency and then we store that digital currency in the cloud, according to Allaire. Circle’s chief executive envisions services that allow users to download apps from their smart phones to send and receive payments. The goal is to “simplify the user interface for digital currency to be much more akin to gmail or text messaging than bitcoins and wallets and keys.”
Circle Internet’s decision to launch in a limited release was also a calculated move, according to Allaire. “We’re not in a hurry for launching everyone in the world to use. Whether it’s customer support or fraud detection, we want to make sure the actual product user experience and how good that is is in a really strong place before we make this available for anyone in the world.”
Supporting that vision is a whole host of investors who have backed numerous bitcoin startups. Breyer Capital, Accel Partners and General Catalyst Partners were joined by Oak Investment Partners to lead the new round. Other investors included Pantera Capital; SecondMarket founder Barry Silber’s Bitcoin Opportunity Fund; Leonard H. Schrank, the former head of the global banking industry’s transaction fulfillment network, the Society for Worldwide Interbank Financial Telecommunications; and Circle board member M. Michele Burns. Circle board member Raj Date also participated through his firm Fenway Summers.
Circle first launched in October 2013 with a $9 million Series A round from Breyer Capital, Accel Partners and General Catalyst Partners.
Beyond the capital, Allaire said that the new generation of startups building off of bitcoin need to take their obligations to their customers seriously.
“As custodians for people’s funds there is a high burden for protecting those assets,” Allaire said. “For this market to become a mainstream market you need trusted services that have benefits for consumers. This is not going to come with hardware wallets and paper wallets hidden in their safe — that’s not going to scale in terms of consumer adoption.”
The current methods for protecting user data are irrevocably broken, said Allaire, and bitcoin offers a credible alternative. “The user interfaces that sit on top of the payment networks are lipstick on a pig. They’re more expensive than existing options and no more secure… [and] every merchant in those existing models you’re trusting with your financial identity.”