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Despite Previous Signals, Bitcoin Remains Key to Circle’s Strategy

Last Updated March 4, 2021 5:09 PM
David Hundeyin
Last Updated March 4, 2021 5:09 PM

After spending a couple of years signaling an impending shift in focus away from Bitcoin and cryptocurrencies, Circle Financial seems to be executing a 180-degree shift in strategy, boosting its crypto-related offerings in a series of moves that some say are positioning it as a competitor to Coinbase.

Circle Distanced Itself from Bitcoin in 2016

Founded in 2013, its flagship offering Circle Pay was initially positioned as a bitcoin-only peer-to-peer payments solution, comparable in operation to non-crypto platforms like Venmo and Squarecash. With expansion however came an apparent shift in direction, culminating in co-founder Jeremy Allaire’s famous 2016 declaration that Bitcoin would be obsolete within a decade in the manner of NCSA Mosaic and Netscape Navigator.

In line with this thinking, Circle Pay discontinued support for on-platform Bitcoin purchases in 2016, in favour of “next-gen blockchain tech” while still making use of the Bitcoin blockchain for back-end functions. The idea then was that Bitcoin itself was a short-lived bubble, but blockchain technology would survive it and become the real winner from the cryptocurrency boom.

2018: An About Face

In recent months however, Circle has silently ramped up its crypto investment service offerings, acquiring a Bitcoin exchange (Poloniex) and rolling out services that support retail crypto trading (Circle Invest) and institutional crypto trading (Circle Trade).

Circle Invest is of particular attention because it enables users to trade seven supported cryptocurrencies on the platform. A new feature on Circle Invest called ‘Buy The Market‘ even permits equal spread investment across all seven cryptos with as little as $1.

The pointed change in strategy has not gone unnoticed, with several analysts pointing out that Circle Invest and Circle’s wider strategy is now looking very similar to that of Coinbase in terms of operation and target market. In their eyes, this is evidence that Circle may in fact be morphing into a traditional full-service crypto investment company.

Co-founder Sean Neville does not, however, agree with this notion. He sees Circle Invest as merely a logical result of Circle’s evolution which Bitcoin has always been central to, instead of a fundamental change in direction. In his words:

“We never left bitcoin. We believe in bitcoin. Everything that we’re doing is based on crypto assets and underlying blockchain technology. We’re not necessarily bitcoin maximalists, it’s not necessarily the perfect thing for everything that we’re doing, but it’s extremely valuable and a core component of what we’re doing…[Circle Invest] is aimed at someone who wants to get involved in trading crypto assets but needs somewhat of a guided experience. We provide things like custody. It’s a really simple way to acquire multiple kinds of tokens in just a couple of taps.”

Jeremy Allaire also avoids the comparisons with Coinbase, describing Circle as a competitor primarily to conventional financial service firms like TransferWise, Venmo and Square Cash.

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