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USDC issuer Circle CEO breaks down company鈥檚 new $9 billion valuation: CNBC Crypto World - YouTube
Channel: CNBC Television
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Today circle's valuation doubles
as part of a new SPAC deal. We
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talked to the company's CEO JP
Morgan warns that Fed rate hikes
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could cause massive losses for
the crypto market. That same
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investment bank launches allowed
in the metaverse. Welcome to
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CNBC crypto world I'm Teneo
McKeel. The Crypto market is in
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the red again today falling
about 2.8%. By noon Eastern and
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pending Fed rate hikes and
inflation risk continue to weigh
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on cryptocurrencies across the
board. Bitcoin slipped below
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$42,000 falling a little less
than 4% in the past 24 hours.
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Ether dipped below $3,000 and
fell about 3% Meanwhile, ripples
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XRP lost about 2% Since
yesterday, today is the deadline
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for ripple to release documents
that could have major
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implications and its legal
battle with the SEC. Okay, those
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are the price moves. But let's
also talk about some of the
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headlines first, the DOJ just
named its first director of
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cryptocurrency enforcement, Eun
Jung Choi will lead the national
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cryptocurrency enforcement
team's efforts to crack down on
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illicit transactions and hacks.
The NC E T was created in
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October of 2021 and has more
than a dozen prosecutors, most
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notably it's involved in the
prosecution of the New York
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couple arrested in connection
with four and a half billion
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dollars worth of stolen Bitcoin.
Next, the largest bank in the US
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is getting in on the metaverse
JP Morgan just opened the Onyx
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lounge in decentraland. It's
part of the bank's growing
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blockchain and Metaverse
efforts, and it coincides with
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new research from JPMorgan
advising businesses on how to
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take advantage of the $54
billion in digital transactions
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annually. It also represents a
strong contradiction from some
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of the comments that CEO Jamie
Dimon has made in the past like
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calling Bitcoin fool's gold. The
investment bank also released a
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note calling crypto fairy dust
at risk of massive losses in the
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wake of higher interest rates.
Circle the payments company
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behind the popular USD see
stable coin just updated its
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deal to go public, the nice back
deal with Concord acquisition
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core double circles valuation to
$9 billion. And the updated deal
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comes as stable coin space
renewed scrutiny among federal
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lawmakers around Kate Rooney sat
down with the company CEO to get
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more context on the deal and
what it means for the stable
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point industry.
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Of course, a double devaluation
talks about growth of USD coin.
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So that's the stable coin issued
by circle walk us through why
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the company is now worth twice
as much as it was when he signed
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his deal just last summer.
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Well, what we've seen, really
over the last year has been
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tremendous momentum for USDC.
And that's really across a lot
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of different metrics. We look at
USDC as as a kind of platform
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business, it's a it's a
capability that the entire
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ecosystem can build on top of
whether you're building a
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protocol, a digital wallet, a
financial service, a web three
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app, and we've just seen
adoption all around the world,
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for people building it. And
alongside that, we've seen this
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tremendous growth in the amount
of USDC in circulation. And so,
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you know, from, you know, early
in 2021, we've seen it, you
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know, grow added about 45
billion in circulation. And even
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just since the start of this
year, we entered the year with
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42 billion USD see in
circulation, we're approaching
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53 billion in circulation today,
that growth has really been
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tremendous. And so alongside
that growth is growth in our
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financial outlook, the
monetization that we see in
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USDC. And and the other services
that we build around it.
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So $45 billion is a big number.
Can you walk us through how that
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adds to two circles, bottom
line, and how you guys make
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money off of USDC? And the
stable coin set up there? How
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does that affect circle?
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Yeah, so we really have a couple
of kind of core businesses, we
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run what we call our stable coin
market infrastructure. And
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again, I as I'm an internet
technology guy by background,
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and we look at this as sort of a
protocol, an open infrastructure
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that developers and other other
builders can can take advantage
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of and build on top of. And so
you know, really, that's just
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making sure that that's a market
infrastructure that's easy to
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adopt. And as that grows, we
monetize through the reserves.
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And so as as we've seen, the,
you know, the interest rate
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outlook increase, and we've seen
the dramatic growth in UCC in
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circulation, that creates a
very, very significant income
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stream. We also then, you know,
over the past two years have
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built out additional products
around USDC transaction
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services, Treasury services, a
crypto lending product, and
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these are also growing and these
kind of additional services that
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companies can use
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circles also looking to get a
national bank charter. Give us
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an update on that process. Why
go that route?
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So, last, late summer, early
fall, we announced Our intention
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to file for a national bank
charter. And very specifically,
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what we are interested in being
is a, a full reserve digital
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currency bank. And I think
what's important to note is,
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that's a novel charter. And in
fact, you see today, in the
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discussions around, you know,
the Treasury Department looking
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for kind of new supervisory
frameworks for stable coin
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issuers, such as circle, really,
you're seeing Congress and
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Treasury discussing, how does
what is the specific form of
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charter? What are the specific
kind of rules around someone
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who's holding a full reserve
dollar digital currency? What I
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can say is that we've had very
constructive engagement with
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national bank regulators. And I
think, you know, as I like to
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say, there's no OCC exam manual
for stable coin issuer. But
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there's going to be and we got
to work through that.
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We did get some minutes or the
minutes from the January Fed
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meeting yesterday, some of the
members did seem concerned,
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concerned about crypto, there's
a line about emerging risks to
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financial stability, rapid
growth of crypto assets and
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defi. Platforms. Do they have a
point there? Are you worried
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about any of those same risks?
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I mean, look, it's it's
obviously it's a $2 trillion
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asset class, you're seeing
payment systems being built up
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digital currency payment systems
being built up, that are doing
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trillions of dollars in
transactions and growing and,
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and so I think, you know, my
view has always been that this
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technology is a new economic
infrastructure, it's in a new
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internet, native economic
infrastructure that the world is
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going to get built up around our
financial system, our economic
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system, the way corporations
function, the way commerce
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functions, all these things are
going to get rebuilt on the
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public internet on this
infrastructure. And so yes, it
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is, it's going to be a really
significant infrastructure. And
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I think it's appropriate to be
thinking about it in those ways.
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And that's why I think it's
important for policymakers to to
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be, you know, kind of thinking
about, you know, what is needed
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to ensure that, you know, the
tail risks are addressed that,
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you know, good actors are doing
what they need to do. Yeah,
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well,
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speaking of the Federal Reserve,
which you mentioned earlier,
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they finally put out that white
paper on Central Bank digital
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currencies in January, they
talked a lot about CBDCs. And
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what it would mean to
traditional finance to banks,
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and to some of the privately
issued stable coins like USDC,
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would that append any demand for
some of the private stable
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coins, like the one that circle
issues?
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Yeah. So I think if you look at
the history of electronic money
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innovation in the United States,
and largely in most advanced,
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developed markets and the West,
over the past 75 years, it has
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been driven by private sector
innovation, you know, and driven
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by, you know, standards that are
built, that allow for, you know,
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the private sector to kind of
build networks and
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interoperability, whether that
be our wire messaging systems,
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or credit card networks, or
debit card networks, ATMs, Apple
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Pay PayPal, you know, all of
these innovations have have been
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really driven out of the private
sector, underneath. They are
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supported by the safety and
soundness of the Federal Reserve
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of the monetary policy of the
United States. And I think what
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we're seeing today, with
digital, you know, currency and
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dollar digital currencies, like
USD see is just a continuation
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of that, of that trend. Now, I
think, you know, from
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ultimately, the pace of
innovation that's going to
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happen there is going to far
outstrip any government
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sponsored r&d project. And so
one of the risks, of course, is,
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you know, a government sponsored
r&d project that may take three
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years or five years, etc, may
already be obsolete
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technologically. And so our view
is that, you know, private
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sector standards, open Internet
standards are going to reach a
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critical mass in particular over
the next two to three years. And
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that's going to need to be part
of the Federal Reserve System,
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it's going to need to be part of
the international monetary
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system. And ultimately, if there
are upgrades, if you will, to
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the core architecture of the
dollar, as I like to say, you
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know, the dollar is a is an
Oracle database running on some
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mini computers, if the if the
core architecture of the dollar
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was updated into, you know,
cryptographic keys. You know,
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that's great. That could be an
improvement. But I don't think
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that that's going to change the
the kind of innovation for how
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people on a day to day basis are
using digital currency.
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Before we go, we want to remind
you that you can find the full
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interview with Jeremy Alera at
cnbc.com/crypto World. And with
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that you're all caught up for
today, but we'll be back again
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tomorrow with more. We'll see
you then.
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