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In this new interview, Joyce Yang and John Chen interview Jeremy Allaire from Circle. Jeremy is the co-founder, Chairman and CEO of Circle, a global crypto financial services company that provides individuals, institutions and entrepreneurs with a platform to invest in, store, trade and use digital assets, and raise capital through online securities offerings.

In the last few months, Circle has been actively pursuing new growth opportunities such as the recent expansion into Bermuda to service international customers, and also offering fiat-to-crypto trading, and introduced new asset pairs for Tether and USDC on its exchange Poloniex.

In our conversation, we spoke to Jeremy about the rise of USDC, China’s digital currency, regulatory headwinds in the US and the future of the exchange space. 

Joyce Yang 

Hi Jeremy, thanks for coming on to the show. So we originally planned this interview to get takeaways from your launch with Justin Sun and Mr. Warren Buffet, but now that the launch is postponed, when do you think we’ll hear about it again? 

Jeremy Allaire 

I have no idea [laughs]. I obviously got invited to this and then all hell broke loose, but I really have no idea other than being told that it was being postponed. 

Joyce Yang 

How did you get to know about Justin and the team there? 

Jeremy Allaire 

We’ve been in the crypto space obviously for a long time. I’ve been connected in the China side of things. Over the years, we have a lot of investors out of China, strategic investors out of China, I’ve spent just a lot of time in China and so I obviously got to know Justin through that and I think that’s sort of the connection there. 

John Chen 

Excellent and so for the few folks who may not know much about Circle, can you share with us a bit about your background and some of the biggest business segments that Circle covers? 

Jeremy Allaire 

Yeah sure. So I co-founded Circle almost six and a half years ago with Sean Neville, and Sean and I have collaborated on and off building lots of different products and businesses and things over 20 years now or about 20 years now, but my background prior to that was in building other global publicly-traded internet technology companies. My first company, Allaire was just out of college. A number of us started it and basically built some of the first web programming languages, app server infrastructure products, web development tools, content management systems. That was a mass-market business with millions of customers all around the world and a publicly listed company sort of in the first generation of building out of the first phase of the commercial Internet. And then we merged into a bigger Internet software company Macromedia, where I was chief technology officer and we worked on what I call interactive media platforms for the internet, the flash platform which lots of people experienced as consumers. Certainly, it was on 98% of computers and then built out a lot of other kinds of technologies around that and then I left Macromedia and started my next company called Brightcove which was in 2004. That’s a publicly listed company here in the US. It’s a dominant online video platform company and powers the video platforms for thousands and thousands of media companies, major brands. And I think it’s invisible to you as a consumer because it’s not a consumer brand like YouTube, but it’s behind the scenes to run all these video operations. And that was really just my passion. The first phase was sort of how do you build software and content applications that can run over the Internet? And then how do you do television and media over the Internet? And that led me into working on Circle and very specifically, I got into crypto in 2012 and just decided with Sean to start Circle in 2013. We really just saw something very similar to earlier generation of the internet which was the birth of a new infrastructure layer, a new sort of protocols, a new sort of decentralized technology that would allow for money to work the way the rest of the internet works. And I think that animated apps got us very excited about building new kinds of global financial company, all built on the open Internet, all built around interoperable standards and protocols and digital currency which is really where the origin of Circle came from. Circle today, we’re about 250 people with offices in the US, Europe and Asia and we operate several different businesses. We have an exchange business which is PlanEx which is a business that we acquired that has customers in over 150 countries and about 70% of the customers are outside the US actually. So it’s already very international. We have a simplified retail brokerage-like product called Circle invest which allows people in the US only right now to connect their bank accounts and instantly purchase around a dozen different crypto assets and do recurring buys and sort of buy collections of assets. That’s a mobile centric product that’s sort of on the retail side. We also run one of the largest OTC trading businesses in crypto, Circle trade which trades with really a very broad range of the ecosystem. Everything from crypto funds to exchanges to other trading desks, market makers, high-net-worth individuals, family offices, asset managers. It’s really broad, and that’s an institutional type product for people who are trading large volumes of top digital asset. So we’re a liquidity provider and a service provider in that, and that business is also very international. I think about 35-40% of it is North American. Asia is similarly around 30-35% and then Europe more broadly is its remainder. But it’s also global and we do have operations in Hong Kong that supports that and support onboarding of institutional clients as well. And then another major initiative that we launched last year but we have been working on for quite some time is something called US Dollar coin. And U.S. Dollar coin is sort of the fastest-growing financially transparent stable coin issued by regulated financial companies. So today, its issued by Circle and Coinbase. It’s very different than other platforms out there. We can maybe talk about that in more detail a little bit but that’s growing quite fast. Its about 420-430 million in circulation. We’ve tokenized over a billion dollars on that platform and that’s really fundamental to we think the future of all crypto finances. This sort of tokenized fiat digital currency and using smart contracts and other things to build services around that. And then the last piece of what we do is we run a fundraising platform. So we acquired a company earlier this year called Seed Invest, which is a regulated broker-dealer in the US. It is a company that’s innovated for about 4 years in digital online fundraising. So the current business is helping startups to issue securities and sell them to investors over the internet entirely digitally. And they’re one of the largest players in that space in the US and they help from seed stage to even mid-stage companies do these digital securities offerings on the internet and support the whole end-to-end process to do that in a regulated registered way. And that’s a business where we’re working very hard to start doing registered regulated token offerings using security tokens and tokens that would be deemed to be securities as well. So that’s sort of the scope of what we’re up to. 

John Chen 

Wow that’s excellent. Thank you so much for the overview and you guys have definitely been keeping busy. And why don’t we just go back to the UDSC, there’s been a lot of great news recently obviously about USDC adoption sort of reaching a billion in less than a year. I just wanted to double click on that and ask you why do you think it’s been able to grow this quickly and what are your ambitions for it long term? 

Jeremy Allaire 

Well just stepping way back, I think it comes back to why we started Circle in the first place and you actually go back and find the very first blog post that we did in the fall of 2013. It talks a lot about our vision for global digital currency and what we think that looks like for people and businesses everywhere. And I think this idea that you could have open standard protocols for money to flow on the internet the same way that content and data and messages and other things flow on the internet was really attractive and that’s what was attractive about digital currency to us. And in particular, it’s even more exciting not just because with that model of taking traditional government money or fiat money and turning it into digital currency and allowing it to work anyway the internet works, it’s also exciting because it becomes programmable. And so back in 2013, a lot of the ideas that were being thrown around in crypto were sort of tied to this idea that you’d have programmable money. And even with bitcoins, people were excited like can we expand the script function of the Bitcoin to be able to do more smart contracts and actually make money programmable in more powerful ways. I think that brought a lot of technologies like Sean and myself into this because we could actually take economic arrangements between people or economic arrangements between people and businesses or whatnot and put them in code and execute them and trust its way on the Internet, and you could have money, be able to move at the speed of the internet with the safety and efficiency of the internet and the security and privacy of crypto, that’s really transformative. So that’s sort of what got us into this. It took a really long time for the infrastructure, for the regulatory environment, for the banking partnerships, there’s like a lot of things that had to evolve to really make some of these things viable. So one precondition was you needed production scale blockchains that could run smart contracts and could issue tokens that third party developers were building on and that you could build ecosystems around and that really took Ethereum to get off the ground. And not just the main net in production, but actually we needed to see that it was becoming mature, that you could safely build things on It, that there were passed forward for other developers to be able to start to do things. So really when starting, late 2016 is when we started to work on what’s called Center. And for us, the idea of stable coins, that sort of the phrase people use now. Back then, we talked about fiat tokens, but the idea of stable coins… it’s really critical in our view that they’re fungible and interoperable and that you have standards for how people issue them and redeem them and run them and that was really critical. It’s not just like a whole bunch of different companies launching stable coins which is sort of like going back to private banking in the late 1800s in the US but instead, you actually could come up with a consortium model with standards and open technical standards that anyone could implement that were published as open API’s that developers could freely innovate on top of and then have consortium rules, kind of scheme governance for how it worked across all the different issuers that could build on that. And so we had developed the technology and the ideas behind that going through 2017 and early 2018 and then we got together with Coinbase who really just shared a lot of the same ideas as Circle about what an open financial system could look like and the desire for having a standards mechanism and a governance mechanism like this and so they were really just a natural partner to co-found the consortium with. So we would put that together and obviously that’s grown. Getting back to your core question though which is why is it growing so fast etc. I think our insight was when we got started, obviously things like tether existed. And tether remains a very robust crypto asset in terms of its market activity, but what it really seemed to us is that it was unlikely that the future of open finance was going to be built on tether. That if you’re going to have mainstream businesses, merchants, if you’re going to have people issuing securities, debt contracts, all kinds of things interacting with an infrastructure right, it was it was going to have to be more mainstream. And not just like an offshore opaque kind of quasi shadow banking thing. And so we wanted to do this out in the open and we believe that the market would want something where they knew that the rails were being handled by regulated compliant financial institutions, where the project itself was sort of governed with multiple stakeholders, that the actual assets themselves were truly financially transparent, where there’s proof of reserves, where there are major auditing firms that are evaluating those accounting procedures and attesting to all that and the balances every month and that it actually like worked with seamless fiat rails right. It’s really critical that the on and off-ramps like anybody basically can wire in and out and or get that going. So all those things we thought were going to be really important and it’s turned out that they are. I mean people want high-quality companies that they feel are there, they want to know there’s some safety around it, that the funds aren’t stolen or people running off with them or a fractional or any of that kind of stuff and those are important. And I think the combination of Circle is really in a strong position with the institutional community because of what we’ve been able to build out with Circle trading and coin base is really in a strong retail position anchored it really well and because we did it in this very open way, third parties also adopted it really quickly. So major exchanges like Binance and many others elicited made it a base pair and all that combined has helped it grow. And then pretty much unlike any other stable coin in the market including tether, just the whole defy community, tons and tons of companies are just implementing support for USDC because they trust it. And it’s got support and they know some of the big players out there are behind it and so they’re sort of flywheel effect of an ecosystem is really kicking in and that’s really helping. So I think those are some of the things that have helped it grow up to this point. 

Joyce Yang 

Yeah speaking of Tether, we’ve seen Bitfinex and Tether coming under SCC scrutiny and then we also hear news about Circle laying off 10% of employees, giving them regulatory and headwinds and you recently testified before the senate committee around the regulatory frameworks for digital currency and Blockchain. Can you share some of your thoughts there with us? I mean I think we’re seeing on an overarching scale that there is a repertory overhang on all the stable coins. 

Jeremy Allaire 

Well I think basically, crypto has just continued to grow. Bitcoin continues to get more and more adoption, more and more people see it as valuable, stable coins are growing, we’re sort of all collectively as an industry building this open global digital currency based financial system. So in many respects like regulatory interest, it’s just really following market activity. So there’s all this innovation, there are all these things happening in the market and that’s what regulators care about. They’re there because their job is to manage against particular risks. So that could be a national security risk, that can be just generally the risks for society, of criminals running freely. They can deal with because there’s value at stake, making sure that assets are safe and protected and people don’t get defrauded. That’s what regulators are there to deal with, all those risks. And so when you have something that’s kind of exploding off and growing around the world and there’s no official rules around it, bad stuff can happen and we see that. I mean, for the unregulated dimensions of this, there’s a lot of unregulated exchanges and there’s long histories of hacks and thefts and exit scams and fraudsters, running token offerings and multi-level Ponzi schemes. It’s like the list goes on and on. And so those are like real things and so when people start to get hurt or when the technology is being abused by actors and societies are giving government and governments are sort of determined to thwart, that’s when the regulatory stuff really picks up. And so in some ways, the regulatory environment is increasing because digital currency is becoming more important and Blockchains are becoming more important and so it’s sort of like a double-edged sword. It’s an acknowledgment that this is moving towards the mainstream and at the same time, it’s like hey we’re going to try and lay down these rules. I think the challenge really isn’t that there’s regulation or not regulation. Really since we founded the company, I testified to the Senate back in the fall of 2013 right in the midst of the shutting down of Silk Road and the initial crypto bull run in China and the message has always been from us. There have to be rules, the firms that actually act as intermediaries that aren’t just like decentralized software but who act as intermediaries custody funds interact with the banking system are entering into these fiduciary roles, there have to be rules. And we’ve always been of the view that you should try and come up with rules that deal with the risks, but don’t just try and fit crypto into the existing regulations for the existing financial system, and so take a principles-based approach to how you look at this. And because so much of this is new and because so much that this is moving so fast and there’s so much technical innovation, just make sure there’s enough room for all the innovation to happen and that’s been the general message. I think what we’ve seen though is some overreaction and in some cases, really overreach I think in many cases, and the U.S. is certainly an example of this. The securities regulators in particular, their job is to enforce the laws that are on the books and whether that’s the laws that are passed by Congress or the case laws that have been established through the courts and that’s their job. And the laws that exist today for securities regulation in the United States have never contemplated something like digital assets, at least in their fullest expression and form. And so the idea that you might have a digital asset that is issued algorithmically by a Blockchain through the work of computers or the work of individuals who are staking assets that could function with economic incentives for participants, but also really function as a commodity resource and also a payment token. Those concepts don’t map to the existing legal frameworks. And so that has led to essentially I think guidance or interpretation of the rules that I think are extremely restrictive and basically would have a very large percentage of digital assets that are out there be in regulated as securities. And once you regulate them as securities at least in the current framework for securities regulation, they lose all their utility pretty immediately because they can’t be freely used and transmitted. It’s very difficult for them to be applicable and usable in a consumer use case or context. And so I think that’s been really negative for the industry, it’s led to more and more projects sort of setting up outside the United States, trying to block US persons from interacting with them. And then firms that are intermediaries in the U.S. like exchanges having to delist a lot of things and actually in some cases, set up new international operations that are outside the United States such as what we’re in the process of doing with Bermuda, and that’s a real loss. And I think that those kinds of things are going to continue not just in the area of securities law but also in other areas of regulation and that’s only going to increase all around the world. 

John Chen 

That makes sense. So toggling over a few weeks ago, you were on CNBC explaining the rise in the price of Bitcoin and decided “rising nationalism, rising amounts of currency conflict, trade wars, are all supportive of a non-sovereign highly secure digital store of value.” Based on the sort of what we’ve seen in this last week, has anything changed about your view of Bitcoin as the store of value particularly when we saw that there was a higher correlation with the equity markets this week and with gold? 

Jeremy Allaire 

Yeah I think you have to zoom out for all this stuff. If you zoom in on a week to week or day to day basis and you attempt to say there’s like these precise correlations, obviously that’s more challenging. I mean in a risk-off environment where a whole bunch of people are within their shelf in the equity market and they’ve made a lot of money in their crypto investments, they may be profit-taking just like in profit-taking equities. So the people who are trading crypto as an asset class versus who are really investing in holding for the long term, I think the behaviors of those are really different and those affect markets differently. Again zooming out, it’s not new anyone. Bitcoin emerged as a response to the global financial crisis and one of the critical pieces of it was a belief in developing a decentralized monetary system that was nonsovereign and that was decentralized and that had a fundamental monetary policy that was deflationary and that in many respects was modeled on gold. So that’s not lost on anyone. We all understand that. And the investment thesis for Bitcoin, I mean there’s a spark of investment thesis so there is sort of short term cycles that people are focused on or things that might move the price. That’s sort of like the trader mentality, but the investment thesis says very clearly that non-sovereign digital highly secure stores of value are going to become more important, not less important for the world. And I think there’s very strong evidence of support for that obviously with the continued growth in the value of Bitcoin and its continued resilience and strength, sort of the honey badger effect and in fact accelerating now developer activity around it which is I think very encouraging. Years ago, it did not have a huge amount of developer activity comparatively speaking. So those are all really positive things but I think to my comments on CNBC, we’re in a really complex global macro environment where there are some unprecedented things happening. The emergence of more and more negative yields, rising nationalism, rising trade conflict, the global macro risks that pose and then obviously very specific markets that have varying levels of volatile or distressed fiat currencies. And I think all those will continue to drive interest in assets like Bitcoin. And there’s a long term view that more and more people will want to have some of their wealth in a digital asset like that. 

Joyce Yang 

Yeahm I actually wanted to quickly follow up on that as well since you mentioned some comments on the Chinese digital currency that the Central Bank of China was going to issue. I wanted to get your take on that as well. 

Jeremy Allaire 

Yeah when we got started with Circle back in 2013, I think our belief has been that there will be significant non-sovereign digital currencies that grow in use and that will be attractive to people for a wide variety of reasons and Bitcoin obviously being the most noteworthy, but we also believe that the major reserve currencies of the world, the major trade currencies of the world would become digital currencies. And I think that’s been a belief of ours, and obviously, with US Dollar coin, the key developer and purveyor of that model were obviously very big believers in that. Our view has always been that the role of the RMB was going to grow in the world. And I think the broader concept of the internationalization of the Yen and the Belton Road initiative and the desire to really expand China’s role as a trade counterparty in more and more regions for consumers in more and more markets and businesses in more and more markets to have more direct forms of integration and trade with China. That’s a major force in history and that’s happening. And so different currency is just such a natural path for that to grow. It becomes a model. I mean there’s sort of the domestic part of it which is having M0, be all digital and giving China I think in some ways better monetary supervision, better monetary policy transmission in a model like that then certainly cash and I think that’s something that every central bank will eventually see and follow. I’ve always been impressed by the People’s Bank of China and how forward-looking they’ve been on this and has followed these developments really closely I think but very specifically, a digital currency version of RMB that runs on software platforms that could be run over the internet, it really creates an opportunity for China and Chinese companies to interact with counterparties all around the world directly and bypass the Western banking system and build more direct settlement paths and when you imagine a smart contract infrastructure growing, to have more forms of economic arrangements, trade arrangements, other things, running over digital infrastructure, over the internet, between China and the rest of the world. And so for me when I look at it, I see a country that is looking at the next 10, 20, 30 years, the role that China can play in that and building an infrastructure to support that. So I think it’s very bold. I think it’s really critical and I think it will probably have a great deal of success. I think it’s noteworthy that there is not a single person in the United States government or the Federal Reserve working on anything remotely close to it and so I think it’s an example where China is way ahead in terms of technical innovation and in terms of innovation in payment systems. And the way I think the future of the economy is going to work, I think China is just way ahead and so I think that’s really fascinating to watch obviously. 

Joyce Yang 

Yeah for sure. It’s really interesting to hear from what you are saying about the US and the regulator’s not really touching on that at all and I think from some of our sources, it seems like the technology and the infrastructure has already been built on the digital currency side in China and now, the main roadblock has been the politics and the reservations about actually rolling it out as you can imagine would impact 2 billion or so number of people which is pretty extraordinary. 

Jeremy Allaire 

Yeah, I think the biggest thing on this is just whether it’s the United States or China or Germany or the Eurozone or Japan or any country. I think we’re moving into this world where the tokens that represent currency value can be transmitted over the Internet to anyone instantly cheaply. And that’s a radical change in the way the monetary system works, in the way payment systems work, the way that economic interaction can work. And I think ultimately the answer is you’re going to have every country having a digital currency. It’s just going to look like the world that we have today, but it’ll be using blockchains. I think we’re moving towards greater economic integration despite the short term headwinds that exist with things like nationalism or trade conflicts or a resurgence of economic mercantilism. I actually think ultimately, we are headed towards deeper integration in that digital currency and the development of new global tokens that are ultimately baskets of reserve currencies will emerge ultimately as the preferred model for people and businesses around the world and that will be the likely mid to long term outcome of a lot of this. 

Joyce Yang 

Yeah. I want to take a step back and actually get your thoughts on the exchange landscape since we’re seeing folks like Binance coming into the US and for the majority, people recognize that U.S. is the largest market. How do you see the exchange space playing out obviously with Coinbase and Circle being one of the leading exchanges in the US right now? 

Jeremy Allaire 

It’s obviously fascinating. I think we’re going through this evolution of offshore unregulated to onshore regulated and differences between how those might operate. I think you’re seeing new government policy exist in countries that are trying to embrace crypto and embrace digital assets and I think Switzerland, Bermuda, Singapore are sort of examples of that in different ways and it’s really going to reshape this. I think the game of complete regulatory arbitrage is going to end as ultimately policies probably normalized over time and then people are going to focus on what are the venues that are safe and trustworthy, that have quality projects, that have great safety and custody, that have the right licensing, that have really good on and off-ramps, those things will become really critical as well. So I think it’s obviously highly competitive, but it’s also very dynamic with the regulatory environment. I mean clearly, Binance had to shut off their core service for U.S. persons in the coming weeks. I’m assuming that’s because of some pretty massive regulatory heat from US government agencies, not because they just decided to be a good idea. And so I think the heat is turning up and that’s going to obviously affect the way every player in the space is operating. 

Joyce Yang 

Thank you that was wonderful. And how can our listeners learn more about Circle and get in touch with you or kind of follow what you’ve been up to an ongoing basis? 

Jeremy Allaire 

Yeah,  no problem. So there are lots of different channels obviously like our web site Circle.com. You can get into all the different products and businesses and you can sign up for things as an individual.