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Crypto Tax Payments Permitted in Bermuda

Circle, a worldwide financial services firm, revealed on Oct.16th that Bermuda has started accepting tax payments using its stablecoin known as USD Coin (USDC).

This undertaking is a part of a broader strategy by the Bermuda administration to utilize decentralized financial services and protocols, as well as the United States dollar-backed stablecoins.

Circle CEO and co-founder Jeremy Allaire noted:

“Bermuda’s Premier made a broader announcement today about embracing stablecoins as the future of the financial system, with a focus on innovations in fintech that can deliver value not just for Bermudians, but also globally via company’s licensed under their Digital Asset Business Act.”

Presently, Bermuda’s economy is dependent on the United States dollar to back up its Bermudian dollar. Allaire, therefore, trusts that this approach will be instrumental in ensuring that USDC is embraced in governmental services.

Circle also acknowledged that the company had been given a “Class F” license under Bermuda’s 2018 Digital Assets Business Act (DABA). It has, therefore, been claimed that this accreditation makes the firm the first-ever primary wallet service and cryptocurrency exchange provider to be given such a permit.

Allaire proclaimed:

“Through the DABA, Bermuda is one of the first countries in the world to create a comprehensive regulatory framework for digital currency and digital asset-based products and services, including licensing of firms operating payment systems using stablecoins. It will be interesting to see how other governments will respond to this fundamental innovation.”

In 2018, USDC was established based on a partnership between Circle and Coinbase.

Image via Shutterstock

New Money Theory in Action: Circle's USDC Stablecoin

Circle is gearing up for 2020 with a renewed deep focus on stablecoins and the powerful potential they hold for people, enterprises, and governments globally.

On Dec. 17, the founders of Circle announced in a blog post, the sale of its Circle Trade OTC business to Kraken. Spokespersons from Circle stated that they are confident that Kraken will continue to deliver a best-in-class OTC liquidity service to its former customers.

2020 Road MapAccording to the blog, the focus moving forward will be to build on Circle’s core services which support its stablecoin, USDC, and unlocks financial use cases worldwide. The blog highlighted that the 2020 product roadmap will demonstrate the stablecoin focus initially in the form of new global payment, custody, and wallet APIs. The founders said, “These APIs will be offered as services to businesses and developers everywhere who will be able to take advantage of the innovation and efficiency of stablecoins without the cost, complexity, and risk of implementing this infrastructure themselves.”

Tip of the Iceberg

While Circle’s platform services have supported its Pay, Invest, Trade, and USDC products and businesses, Circle’s founders stated that what the products the public has seen is merely the tip of the “iceberg” of what the core will be capable of with the new layer of APIs. According to the blog post, these APIs will accelerate the adoption of stablecoins and USDC.

Sean Neville, Founder, Circle said, “It’s an exciting time to be building, as so much of what we’d envisioned upon founding Circle is now finally becoming reality at scale. Stablecoins, third-generation blockchains, and deep global policy engagement suggest to us that the mass-market phase of cryptocurrency adoption is approaching over the next two to three years.”

USDC: Revisited

Stablecoins are a type of digital asset or cryptocurrency designed, as the name implies, to be stable. The minimized volatility in the prices of stablecoins is due to it being pegged to some form of stable asset such as fiat money, commodities and precious metals.

There has been an increased global interest in stablecoins and digital currency backed by central bank money, the introduction of third-generation public blockchains, and the accelerated global policy interest in crypto all provide an exciting backdrop for Circle’s new platform services in 2020.Reiterating their mission, the founders of Circle wrote, “Many of us in this nascent crypto ecosystem set out years ago on a shared mission to create an improved, inclusive, open financial system for the world. We’ve made a small yet undeniable impact so far, but we’re far from done.”

Classification of Stablecoins

According to the report issued by the European Central Bank, there are 3 main types of stablecoins:

1) Tokenized funds

· Every unit of tokenized funds represent a claim on the issuer over the funds it received from users;

2) Collateralized stablecoins

· Backed by assets whose price in the currency of reference fluctuates over time;

3) Algorithmic stablecoins

· Adjustment of token supply to maintain price stability of the reference currency and guide user’s expectations on its future value.

Circle’s USDC is an example of off-chain collateralized stablecoins, which USDC is collateralized in US dollars and can be exchanged for 1 USDC :1 US dollar. For every USDC issued, there is a corresponding US dollar held in the reserve bank account. The rules of issuance and redemption of USDC are overseen by CENTRE Consortium, in which the fiat reserves are audited by Grant Thornton on a monthly basis.

Implications from New Money Theory

Money Flow

Money flow refers to the process of money transfer and redemption. Unlike traditional fiat currencies that is issued by central banks, the smart contracts of CENTRE manage the minting and redemption of USDC. For minting, onboarding customers first access the web application maintained by a licensed CENTRE token-issuing member. The issuer then executes a series of commands with the CENTRE network to mint, verify and validate fiat tokens pegged to the value of deposited funds. After the verification process, customers can use the minted tokens for transfers.

For redemption of USDC, the execution is in reverse of that for minting. Customers access the issuing web application and deposit the tokens into a wallet address made available to his account, then the issuer executes the transfer from the USD reserve to the customer’s designated bank account. In this case, this is different from the money flow of fiat currencies that the tokens are withdrawn from circulation. The USDC will be burnt or destroyed if the value of USDC surpasses the pre-funded fiat buffer maintained by Circle.

Money Form

For off-chain collateralized stablecoins, most jurisdictions do not grant legal effect to the transfer of assets outside the books of existing payment systems and security settlement systems. Only what exists in digital form can be transferred with digital means. Stablecoins such as USDC represent a digital money form and Circle will be responsible to keep USDC in safe custody outside Circle’s blockchain and deliver USDC to users when requested.

Kun Hu, CEO, Blockchain.News and strong advocate of an inclusive and open financial system, commented, “From a higher perspective, this could be viewed as an ushering in of a new form of money flow that will ultimately replace the traditional systems. As discussed in our blockchain in human history series, there are three key aspects where we expect blockchain to have the most significant impact—the issuance of money, the forms of money and the flow and transaction ability of money.” He concluded, “Stablecoins, such as USDC do strongly support two of these aspects, new money flow and new money forms as it is still an encrypted currency, but their values depend on regulation and their underlying assets, which is usually fiat currency.”

Circle's New APIs Simplify Complex Crypto Concepts For Mass Institutional Adoption

Circle, the main stablecoin leveraged by Coinbase, has expanded its services to programmable functionality of its USDC stablecoin.

Circle revealed three new APIs for businesses in a blog post on March 10. The new tools for developers are aimed to facilitate the use of USDC by traditional businesses and additionally create a digital replacement to traditional fiat channels. API tools allow software developers to build on top of and interact with an application.

Programmable Dollars For Business

The first API update, Circle’s Payments API, facilitates the use of credit card and debit card payments by businesses to then settle payments in USDC. This should greatly expedite the time it takes for businesses to receive funds from weeks to days.

Circle will also allow its users to receive cryptocurrency payments without running nodes via its Wallets API. This API provides a simplified layer of familiarity for traditional business to effectively leverage complex concepts in cryptocurrency such as gas fees or private keys.

Finally, Circle’s Marketplace API allows customers to use USDC in other ways. For example, businesses can use the API to “top up” customer funds, enable peer-to-peer payments, or pay suppliers.

In the blog post, Jeremy Allaire, CEO, Circle said, “Until recently, for a business to take advantage of this infrastructure it has often been complicated and confusing. Crypto wallets, exchanges, blockchain transaction management, gas fees, private key security, banking connectivity, and compliance hassles have all been technical and operational impediments to the average internet business jumping into digital currency.”

Circle is currently offering early access APIs, but production APIs are on the way.

A Catalyst for Institutional Adoption

With the launch of the new APIs, Circle aims to simplify the world of digital payments so that company can setup and begin using an account with the same ease that they might open a business bank account.Allaire said “Companies should be able to then easily upload their dollars to the internet, convert them into digital currency dollars, and start storing and using these stablecoins for everyday payments.”

Circle Sold OTC Business to Re-focus on Stablecoins

As reported by Blockchain.News on Dec 18, Circle had announced that they would approach 2020 with a renewed deep focus on stablecoins and the powerful potential they hold for people, enterprises, and governments globally.

On Dec. 17, the founders of Circle announced in a blog post, the sale of its Circle Trade OTC business to Kraken. Spokespersons from Circle stated that they are confident that Kraken will continue to deliver a best-in-class OTC liquidity service to its former customers.

Along with the sale of the OTC business, Circle made a number of organizational changes to help align their operation and talent to match its stablecoin platform service focus and future roadmap. Notably among these changes was the successful sale and restructuring of Poloniex, its exchange business, to a standalone company backed by an Asian investment group. It appears that Cirlce has made good on their goal to focus on moving forward by building on Circle’s core services which support its stablecoin. At the time Allaire said, “These APIs will be offered as services to businesses and developers everywhere who will be able to take advantage of the innovation and efficiency of stablecoins without the cost, complexity, and risk of implementing this infrastructure themselves.”

Image via Shutterstock

MakerDAO May Onboard USDC as DAI Collateral Support to Combat Mounting Liquidity Risk

The share plunge of the cryptocurrency market has severely hit MakerDAO, the leader in the decentralized finance (DeFi) ecosystem. Last week its market value fell sharply from 889M to $246M which brought together Maker’s developer community who have recently discussed adding support for Circle’s USDC as collateral to hedge against the liquidity risk.

MakerDao Foundation’s Developer Team hosted a public meeting this morning where the discussion focused on the code on the collateral adaptor for USDC.

According to the official thread, adding the stablecoin as collateral will help to create liquidity for Maker’s Dai stablecoin and push the Dai peg back towards $1 – “The mechanism of this looks like: Lock USDC -> Mint Dai -> Sell for USDC -> Repeat.”

The thread also states USDC collateral, “ Will allow Vault Holders to close their Vaults without eating the loss on the Dai peg being high against USD.”

Diluted DAI

First on the list of the author’s perceived negatives of adding USDC support would be the reduced decentralized purity of Maker’s Dai. Introducing a US dollar backed stablecoin could also hold a regulatory risk and may result in Circle blacklisting the locked up collateral due to KYC concerns.

During the call, a MakerDAO representative dismissed the Dai dilution argument stating, “ DAI is decentralized because there is no central authority that mints or custodies or approves people’s access to it. The individual does all of it for themselves, that’s why the community is driving the parameters of the systems (per the discussions in forum).”

The representative emphatically summarised, “To say that DAI is not decentralized because of some of the assets that might back it would be erroneous.”

Finding a New Peg for Dai

As reported by Blockchain.News on March 13, following the global stock market crash, the price of multi-collateral DAI (MCD) lost the dollar peg and reached USD 1.07.

To restore the pegging between MCD and USD, the MakerDAO community also has proposed the reduction of DAI Saving Rate (DSR) which brings more DAI in circulation and thus moving the DAI price closer to the $1 peg.

The Maker Foundation have confirmed that they are now making the technical preparations to onboard Circle’s USDC as collateral, but no strategy to restore Dai’s peg has received a confirmation vote yet from Maker’s governance council.

Image via Shutterstock

USDC on Crypto Exchanges Spike as Tether (USDT) Dominance Falters – What This Means

According to an assessment from Glassnode, the amount of stablecoins being deposited on exchanges is an indication that things are turning bullish for Bitcoin.

Per the crypto data analytics platform, the amount of Bitcoin versus stablecoins, measured by “Stablecoin Supply Ratio” (SSR), is currently low, indicating that many newly minted stablecoins have entered into circulation. Glassnode pointed out that the majority of the new crypto assets being minted have proceeded to be deposited on exchanges, and the high liquidity is an indication that investors are ready to buy up cryptocurrencies such as Bitcoin.

In just the month of January alone, the amount of USDC on exchanges has increased by more than 112%, going from $431 million to over $915 million. Additionally, around $1 billion worth of new USDC stablecoins have been minted since the beginning of the year, and most of it has been deposited into exchanges.

This indicates that almost $1 billion worth of buying power can be found in USDC alone, as investors are ready to make a move to scoop up more cryptocurrencies such as Bitcoin. Glassnode said:

“This high figure should increase investors’ confidence in any dips being quickly bought up, making it a bullish signal.”

Currently, Bitcoin’s price is rising steadily, up by 7.45% in the last 24 hours. After having consolidated for the most part of last week, Bitcoin is now trading bullishly at around $36,151.61 on CoinMarketCap.

Why many stablecoins are gaining traction as USDT dwindles

Many stablecoins have increasingly gained popularity, such as Circle’s USDC and MakerDAO (Dai). Dai has grown from $40 million in January 2020 to more than $1.6 billion in market cap. BUSD, Binance’s stablecoin, also increased by 600% in supply during that period of time to hit $1.4 billion in market capitalization at the time of writing.

The reason why many investors have increasingly been favouring other stablecoins over USDT may be due to the uncertainty surrounding the largest stablecoin by market cap. USDT is currently facing an amended lawsuit by the Office of the Attorney General (OAG), who is questioning whether Tether is actually backed by real cash reserves of USD, like it markets itself to be. The uncertainty has caused many investors to flock to alternative stablecoins to protect against the risk of holding USDT.

Circle Doubles Value to $9B with New Deal with Concord Acquisition Corp

Fintech company Circle Internet Financial has revamped its merger agreement with Concord Acquisition Corp (NYSE: CND) through a special purpose acquisition company (SPAC), doubling its valuation to $9 billion from the $4.5 billion initially announced in July 2021.

Under the terms of the new agreement, Circle will acquire Concord to become a public company under the code of “CRCL” listed on the New York Stock Exchange.

Jeremy Allaire, co-founder and CEO of Circle said that：

“Being a public company will further strengthen trust and confidence in Circle and is a critical milestone as we continue our mission to build a more inclusive financial ecosystem. Making this journey with Concord under our new agreement is a strategic accelerator.”

The agreement will replace the previous business combination agreement reached in July last year, potentially extending the original date of April 3, 2022, to January 31, 2023. Also, a new initial external date, which is December 8, 2022.

Circle focuses on the position as the issuer of stablecoin USD Coin (USDC), one of the fastest-growing USD digital currencies, USDC’s circulation has more than doubled, reaching $52.5 billion as of February 16, 2022, accounting for stable More than 29% of the currency market, second only to tether (USDT). The company said：

“[A]lthough we continue to work diligently toward completion of this transaction, the timing will ultimately depend on many factors outside of our control, including the SEC’s review of our registration statement on Form S-4,”

Upon completion of the new transaction, current Concord shareholders will exchange their shares of Concord common stock for equity in the company.

Circle Launches Corporate Account to Support USDC Transactions

The issuer of stablecoin USD Coin (USDC), Circle, has launched a new account service that enables corporate customers to deposit, withdraw, receive and store cryptocurrencies through their account and settle all payments in USDC stablecoins.

Circle focuses on the position as the issuer of stablecoin USD Coin (USDC), one of the fastest-growing USD digital currencies; USDC’s circulation has more than doubled, reaching $52.5 billion as of February 16. Its circulation accounts for stable more than 29% of the currency market, second only to tether (USDT).

The newly added feature enables corporate accounts to integrate cryptocurrency trading into their corporate accounts’ operations and offers eligible investors a stablecoin lending program called Circle Yield, Inc., which offers annual returns of up to 4% to 6%.

Through Circle Account, business holders can pay or receive USDC on eight different blockchains: Ethereum, Algorand, Solana, Stellar, Tron, Hedera, Avalanche and Flow.

A Circle spokesperson said that:

“Some drivers for USDC growth are increased payment use cases, cross-border transactions and the adoption of assets like USDC as a “flight to safety,” especially in countries where the local currency is suffering from a valuation loss.”

USDC Issuer Circle Secures $400M Funding from Fidelity and BlackRock

Circle, the company behind USD Coin (USDC), has bagged funding worth $400 million from different players, including Fidelity Management, BlackRock Inc, and Research LLC, signalling traditional finance interest in the crypto space.

As one of the largest tokens in terms of market capitalization, USDC has just surpassed Tether (USDT) by reaching a $40 billion market cap on the Ethereum network, according to online media Anue, citing data from CryptoRank data.

Currently, USDC’s presence in the crypto market continues to sit fifth among the top-ten cryptocurrencies, with a market capitalization over $50.68 billion, according to CoinMarketCap.

Circle’s partnership with BlackRock, a leading American multinational investment company, will enhance capital market applications for USDC.

BlackRock will also be the primary asset manager for USDC’s cash reserves.

The penetration of cryptocurrencies in traditional finance continues to gain steam. BlackRock’s CEO Larry Fink has shown receptiveness to this sector because he sees it as a stepping stone toward helping clients.

Rob Goldstein, the chief operating officer at BlackRock, acknowledged:

“We believe digital assets and blockchain technologies are going to become increasingly relevant for BlackRock and our clients.”

Circle’s CEO, Jeremy Allaire, noted that adding BlackRock as a strategic investor will boost USDC’s adoption. He pointed out:

“Dollar digital currencies like USDC are fueling a global economic transformation.”

Other investors in the project include Fin Capital and Marshall Wace LLP, with the funding round anticipated to end in the second quarter.

Circle continues to make notable strides in the corporate world. Earlier this year, the Chicago-based company launched a new account service that enabled corporate customers to deposit, withdraw, receive and store cryptocurrencies through their account and settle all payments in USDC.

Furthermore, the newly added feature would enable corporate accounts to integrate cryptocurrency trading into their corporate accounts’ operations and offers eligible investors a stablecoin lending program called Circle Yield, Inc., which offers annual returns of up to 4% to 6%.

Stablecoin USDC Issuer Circle to Apply for U.S. Crypto Banking License

Circle Internet Financial, the second-largest stablecoin USDC issuer, said it is now close to applying to U.S. regulators to operate as a bank.

The company did not disclose when it would file the submission, saying only that it “hopes in the near future.”

If approved, Circle would become the fourth federally chartered crypto bank in the U.S., following Anchorage Digital, Protego Trust Bank NA, and Paxos Trust Company.

Circle has been in discussions with regulators such as the U.S. Office of the Comptroller of the Currency (OCC), which oversees bank charters, after having the idea of becoming a crypto bank last August. These include interoperability between blockchains and how to assess the operational risks of a particular blockchain.

Some U.S. regulators say stablecoins of cryptocurrencies need more regulation and should be issued by banks.

But the company’s partnership with the OCC is well underway, despite the enhancement of regulatory requirements for banks are strengthening to engage in crypto activities in November.

“They’ve been doing a lot of work laying the groundwork for how they’re going to supervise crypto, how they’re going to supervise stablecoin issuers specifically,” Circle CEO Jeremy Allaire said.

Circle, the company behind USD Coin (USDC), has bagged funding worth $400 million from different players, including Fidelity Management, BlackRock Inc, and Research LLC, signalling traditional finance interest in the crypto space yesterday.

Earlier this year, the Chicago-based company launched a new account service that enabled corporate customers to deposit, withdraw, receive and store cryptocurrencies through their account and settle all payments in USDC.

UAE's YallaMarket Now Accepts Crypto Payments

YallaMarket, a grocery delivery startup in the United Arab Emirates, has announced it has started accepting crypto payments for its services as it plugs itself into the financial growth of the UAE.

Per a report from the Khaleej Times, the firm partnered with CoinMena exchange to permit users to make their payments in Tether (USDT) and USD Coin (USDC) stablecoins, respectively.

“We can see now that the world is increasingly adopting blockchain and cryptocurrency technologies. YalaMarket could not stand aside as a company based in the UAE — a global hub for financial technologies. Moreover, as YallaMarket customers value their time and actively implement technologies in their lives, there is no doubt they are among pioneers of using crypto payments,” said Leo Dovbenko, CEO and co-founder of YallaMarket.

The acceptance of the two digital tokens from YallaMarket follows the related move from the Dubai-based Bake N More café, which came into the record as the very first to accept digital currency payments in the country.

The effort to incorporate crypto payments by YallaMarket and a growing number of businesses in the UAE stems from the projection that more residents in the Middle Eastern nation are open to transacting in digital currencies within the next five years, per data from YouGov.

“Crypto adoption is growing rapidly in the region. As the digital economy grows, using crypto as a medium of exchange is a no-brainer. Like all businesses started using the internet 20 years ago, everyone will start using crypto now; it is inevitable,” said Talal Tabbaa, CEO of CoinMena.

Besides accepting crypto payments, YallaMarket said it is open to receiving crypto investments from its partners. At the same time, it also confirmed its readiness to pay its staff in cryptocurrencies in the near future. From Konzum, a Croatian supermarket that started accepting digital currencies last year, to the tons of merchants on Paypal that now process crypto payments, the trend involving crypto payments is now growing, and more vendors are joining the bandwagon.