Bitmain, a multi-billion dollar cryptocurrency mining equipment manufacturer based in China, has a vision of establishing private central banks backed by cryptocurrencies, which would get real help if supported by a stable currency, as idealised by the blockchain-focused financial company.
“It’s a very important enabler for a private central bank. Currencies can do good or bad things, so we need a certain framework to limit money laundering risks. If we have an open platform we can limit the potential negative things,” Wu said.
Previously, Circle operated a brokerage service to enable users to purchase and sell cryptocurrencies like Bitcoin with ease, but after obtaining over $130 million as funds from IDG Capital Partners and Goldman Sachs, it pivoted to a more general money transferring company, utilizing Blockchain technology as its infrastructure’s base layer.
This week, with the backing of Bitmain, Circle announced its re-entrance into the cryptocurrency sector. Unravelling its ambitious plans to release a stable cryptocurrency, Circle intends to compete with USD-backed Tether, MakerDAO, and Basis, which also raised over $133 million venture capital firms recently.
Tether, which reportedly has ties with major cryptocurrency exchange Bitfinex, is currently dominating the cryptocurrency sector as the premier stable coin backed by the US dollar.
At Consensus 2018, Jihan Wu, founder and CEO of Bitmain, stated that Accell, General Catalyst, and IDG participated in the $110 million investment round, noting that the funding round was closed within three weeks since the initiation of the discussion.
During the interview with Quartz’s Joon Ian Wong, Wu emphasized that Bitmain’s investment in Circle was focused on the company’s plans to develop and deploy a stable cryptocurrency called Circle USDC, which will be backed by the USD, like Tether.
Wu explained in previous interviews that he foresees the financial sector to cooperate alongside private central banks backed by cryptocurrencies, and the development of stable cryptocurrencies takes the possibility of establishing private central banks one step closer.