Circle targets cryptocurrency rookies with coin investing app

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Circle Internet Financial Ltd., a mobile-payments and cryptocurrency-trading firm backed by Goldman Sachs Group Inc., is making a push to become the go-to destination for first-time Bitcoin buyers.

The Boston-based firm is introducing a feature Tuesday called “Buy the Market,” which allows users of its Circle Invest app to purchase all seven digital coins offered on its platform at the same time.

Customers can invest as little as $1, and their funds will automatically be spread across the tokens, weighted by market value. Circle builds in a 1 percent spread between the buy and sell prices, which is how it generates revenue, Chief Executive Officer Jeremy Allaire said. The coins are Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Zcash and Monero.

“The vast majority of invested capital by individual investors and retail investors -- the vast majority of any asset class, whether it’s stocks or bonds or currencies or crypto -- is more passively managed,” he said in an interview Monday. “If you’re a newbie and you feel like you’ve missed out or you’re interested now in investing in this category, this is a tried-and-true model that’s worked in retail investing.”

Other virtual-currency companies have launched similar products. Crypto exchange Coinbase said in March that it was rolling out an index fund for accredited investors that tracks the four coins on its marketplace. But unlike Coinbase, Circle has set a low investment minimum and is offering its product to retail buyers, opening up to a larger pool of potential investors, Allaire said.

Some digital-money startups have opted to cater specifically to accredited investors, or more experienced traders, amid concerns that the U.S. Securities and Exchange Commission will continue its crackdown on cryptocurrencies and classify more tokens as securities. Allaire doesn’t think any of the coins his company offers fall into this category. Circle, which announced in February that it was acquiring crypto trading venue Poloniex Inc., has been engaged with the SEC about its exchange business, he said.

The firm is also interested in pursuing a federal banking charter and is looking at other options for expanding its business, including custodial services and lending, Allaire said.

Circle announced last week that it had closed a funding round led by Bitcoin mining giant Bitmain Technologies Ltd. for $110 million, raising its valuation to about $3 billion from a reported $480 million in 2016. The company, which has seven million users, is partnering with Bitmain to create fiat-based digital tokens, the first of which will be backed by U.S. dollars and issued by Circle in the summer.

Bloomberg News
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