Trust, transparency key to crypto’s next phase: Circle CFO
The cryptocurrency industry has come under greater scrutiny in recent months, with companies and regulators paying more attention to the growing digital asset space. Although still very much in its infancy, Jeremy Fox-Geen, CFO of crypto platform Circle Internet Financial, said, “the industry is now mature enough that … almost everyone understands the power of this potential,” he said in a recent interview.
“The way I see it, we’re at the end of a retail-driven speculative phase and we’re at the beginning of a utility phase,” Fox-Geen said in an interview.
Circle, a cryptocurrency platform that issues the digital asset or “stablecoin” USDC, is keeping its own focus on making sure it is well positioned for this coming phase of utility, Fox-Geen said.
Unlike other companies, Circle is looking to increase its headcount over the next year, Fox-Geen said, with the Wall Street Journal reporting that it aims to do so by 25%. But at the same time, the company is looking to ensure that it prioritizes its future investments as it faces an increasingly volatile macroeconomic and regulatory environment.
“The fact that there has been turmoil in the market in no way diminishes the incredible opportunity we have,” Fox-Geen said. “And as a lot of other companies are being challenged, we have an eye on, what’s the opportunity here for us? We’re going to keep building the way we’re building.”
Maintain a robust regulatory dialogue
Preparing for crypto’s upcoming “utility phase” may be difficult as the industry comes under increasing regulatory fire, which in recent months has centered on the question of whether certain digital assets can be considered securities.
Paxos Trust Co. — which issues the Binance-backed stablecoin BUSD — was investigated by two regulators at the top of February, with the New York State Department of Financial Services telling Paxos to end its relationship with Binance due to “several unresolved issues.” Paxos, although now in “constructive” talks with the regulator, also acknowledged receiving a Wells notice from the Securities and Exchange Commission stating that it is “considering recommending an action alleging that BUSD is a security,” according to Paxos ‘ statement.
A February 13 report from Bloomberg reported that Circle – which is also regulated by DFS in the state – issued a complaint to the regulator last year regarding Binance’s mismanagement of its own token reserves.
Fox-Geen declined to comment on the report of the complaint, but said Circle has “a broad dialogue” with its regulators.
“We have a very, very robust enterprise risk management and compliance program and robust dialogue with regulators — including those that don’t yet regulate us,” he said.
The company’s embrace of regulation has been a position it has held since it was founded 10 years ago, he said
“We asked for the digital asset industry to be regulated before it was regulated,” Fox-Geen said, noting that the company’s CEO, Jeremy Allaire, has attended several government hearings pushing for regulation of the industry. “We have always believed that constructive relationships with regulators are critical, and the events of the past year have shown exactly why that is true.”
As a “stablecoin” issuer, Circle has also faced a spotlight as the debate over which digital assets are securities and which are not heats up. Dante Disparte, Circle’s chief strategy officer and head of global policy, tweeted recently on February 14 that the company had not received a Wells notice even in response to rumors on social media, which a spokesperson confirmed is the company’s official statement.
There is, Fox-Geen said, no fixed definition of a stablecoin; “It’s a word people have made up that has been used to refer to many digital assets, including those that have no stable properties whatsoever,” he said.
USDC, often referred to as a stablecoin, is a digital asset that is backed one-for-one with the U.S. dollar, Fox-Geen said, noting that the coin “is not a security.” USDC is one of the only assets that will grow in 2022, Allaire said Friday in an interview with CNBC, potentially showing that “a digital dollar that works on top of these blockchain networks has real utility and real value and maybe gives us some insight into where the benefit comes from as we move forward,” he said.
Creates openness, trust
One of the ways Circle is preparing to take advantage of crypto’s future is by transitioning to a public entity, which has been a goal for a number of years, Fox-Geen said.
The company completed a mutual merger with the specialist acquisition company Concord Acquisition Corp. in December, a deal previously valued at $9 billion that was terminated because of the deal’s time lapse and not other factors, Fox-Geen said.
Circle is no longer looking to go public via a SPAC, Fox-Geen said. As a “fast-growing, profitable company,” it is exploring other ways to do so, such as an IPO or direct IPO, he said. Going public could also bring benefits to the company as it looks to build trust and transparency within the cryptocurrency space, he said.
“We want to hold ourselves to the highest standards of transparency so that people who want to build on our infrastructure in this industry can be confident that they are dealing with people they can trust,” Fox-Geen said. “So the added scrutiny of being a public company we think is very beneficial to us.”
