As we lock focus on 2019 and building the next stage in our vision of an open and connected global digital economy, we first want to take stock of where we are and share a look back at 2018 with all our customers, employees, partners, investors and industry stakeholders.
It has been a tremendous whirlwind of a year that saw fierce yet largely predicted challenges met with resilience and creativity, growth across existing as well as new products, new businesses acquired and integrated, and powerful new products and services built and launched. 2018 proved to be the most significant year in our short history to date.
Overall Circle grew significantly, and we now serve more than 8 million customers from over 175 countries. Across all products and services, we facilitated more than 200 million transactions that totaled roughly $75 billion in value, and those transactions spanned exchange trades, blockchain settlements and traditional bank and card network rails. We expanded the breadth of our offerings from two products at the start of 2018 to five by year’s end.
This customer activity was highly distributed, with approximately 30% of volume coming from the United States, 25% from the EU and UK, 24% from Asia and 21% from Middle East, Africa and Americas (excluding USA). Crypto is highly global, and we’re excited to see adoption and activity spanning nearly every corner of the planet, nearly distributed based on global regional GDP.
Poloniex: Acquisition, Integration and Improvement
In February of 2018, we announced that we had closed the acquisition of Poloniex, one of crypto’s earliest important exchanges (it will have its fifth birthday on January 14). This was one of the largest acquisitions in the history of the cryptocurrency industry.
When we acquired Poloniex, we expected the service to demand significant careful attention, refinement, and support. Through expansion in support operations and engineering, we helped customers by reducing nearly 200,000 open tickets at the start of 2018 to fewer than 1000 by year end. These issues also included historical stuck deposits and withdrawals that were freed for customers. Although we have lofty goals for further support improvements and innovation, our team has dramatically improved service levels and time to resolution.
We also revamped the risk and compliance operations while working to bring Poloniex up to Circle’s standards for risk management and compliance. This included a complete revamp of the customer onboarding and identity verification process, which now allows the majority of customers to be verified and active within minutes of enrollment.
Engineering led a series of critical improvements to core infrastructure behind the scenes which have increased wallet reliability, security, code quality, speed of delivery, monitoring and alert capability, internal tooling, and overall stabilization of the Poloniex platform.
With the service increasingly stable and customer backlogs under control, we turned to curating the Poloniex markets, which included the following highlights:
As part of our commitment to establishing high-quality crypto markets, we introduced the Circle Asset Framework to provide clear guidelines and a review process for projects to be considered for listing
Over the course of several months, Poloniex added a wide range of new listings including EOS, Quantum, Basic Attention Token, Status, Kyber, LOOM, FOAM, MANA, Bancor, and USDC
The curation process also included delisting nearly 20 assets to improve the overall health and quality of the marketplace
As the Bitcoin Cash community underwent a contentious hard fork, we introduced pre-fork trading markets to enable customers to position and prepare themselves ahead of the fork
Through the launch of Circle’s USDC issuing service (more on that below), we were able to introduce new fiat markets on Poloniex with USDC base pairs
Later in the year, we evolved and launched native apps for Poloniex on iOS and Android. These apps provide a high fidelity mobile trading experience for customers in over 13 languages including English, Spanish, French, Italian, Dutch, Portuguese, Turkish, Polish, Chinese, Korean, Japanese, Thai, and Vietnamese.
As Poloniex turns to 2019, you can expect to see accelerated feature development, significant UX improvements, the continued launch of new markets, more robust geographic support and coverage including support for distinct markets and features by geography (as Poloniex already provides today with margin and lending features), and major improvements in the custody and wallet experience.
Circle Invest: Seamless Retail Crypto Investment Experience
We built and launched Circle Invest in the spring of 2018 to make investing and learning about crypto assets accessible and frictionless for everyone. Customers love how they can sign up within a few minutes, deposit money instantly, and invest in a breadth of crypto assets all within a simple, approachable experience. The overwhelming praise from customers has lived up to Invest’s motto of “crypto without the cryptic.”
In May, Invest introduced its first collection, “The Market.” This was the first experience of its kind for consumers, as it made investing in multiple coins at once simple, with no high minimums or fees, and available to everyone.
Following the success of that first collection, Invest expanded to three more collections and counting. Customers who are passionate about a particular category of digital assets can simply buy that collection and also use the “explore” feature to learn more about the assets.
Despite headwinds in the prices of crypto assets and what was obviously an overall difficult year for crypto investing, Invest customer retention has remained strong:
More than 30% of customers buy unique collections, often on an ongoing basis
More than 30% of all purchases on Circle Invest are recurring, and
Recurring trade volume has steadily doubled since September
Looking to 2019, anticipate improved account and asset integration across Circle products, and expect Invest to evolve toward crypto utility and to enable powerful ways for customers to use their holdings beyond investing alone.
Circle Trade: Continued Growth and Leadership
At the other end of the spectrum, our OTC trading business, Circle Trade, has continued to expand despite a tumultuous year for the industry: we onboarded a record number of new institutional clients (more on that below), grew our trading operations to 24/7 with coverage in the US, Europe and Asia, and added significant workflow improvements, including the launch of our RFQ Electronic API.
Circle Trade executed:
More than 10,000 OTC trades, with nearly
600 distinct counterparties, across
36 different crypto assets, and generated nearly
$24 billion in notional volume
Circle Trade has become a core liquidity provider to the entire crypto ecosystem — including miners, exchanges, project developers, and founders — and to the new crypto asset investor base of VCs, crypto funds, hedge funds, and family offices all around the world.
CENTRE and USDC: A New Open Standard for Fiat Money on the Internet
Evolving out of Circle’s early investments in making fiat payments work on public chains (originally USD, EUR, GBP over the Bitcoin network with Circle Pay), we announced and launched US Dollar Coin (USDC), and the strategic partnership and joint founding of the CENTRE Consortium with Coinbase.
Our vision has always been one of open standard protocols for the transmission of value, and we have always believed that this should be realized through a consortium of industry leaders rather than within the stovepiped and siloed walled gardens of proprietary implementations.
This approach has been widely supported in the marketplace, with USDC rapidly rising to be the second largest fiat stablecoin by market cap ($280M at the time of writing), growing at nearly 10% per week, and on its way to be the largest fiat token in 2019. USDC sees 9k+ onchain transfers per week, with over $500M in on-chain transfers in a week, and well over $1.9B in on-chain USDC payments in just 3 months.
USDC is supported on more than 40 exchange platforms and over 80 companies now support USDC including leading wallets, platforms, apps, protocols, and exchanges.
As we approach 2019 and work closely with Coinbase in the establishment of CENTRE, we expect to see more issuers join CENTRE and launch issuance and redemption, more fiat currencies supported using the CENTRE protocols and governance scheme, and more products launch that leverage CENTRE fiat tokens to create value for their own customers.
Circle Pay: Organic Growth Ripe for Crypto-Native Evolution
While the majority of our product and go-to-market investments have been focused on our crypto-native products, Circle Pay has continued to grow nicely and organically. Using Circle Pay, several million customers in the UK, US, and EU experience nearly instant and nearly free payments, including exchange across currencies, in a way that makes money work the way every other kind of content on the internet works.
Circle Pay has taught us a lot over the years about what works — and what does not work — when it comes to payment experiences and today’s crypto rails. As we look to 2019, we are excited to bring our expertise in seamless payments into a more crypto-native payment experience built on CENTRE protocols and fiat stablecoins.
Acquiring a Broker/Dealer and Working Toward Tokenized Assets and Securities
Toward the end of 2018, we announced that we had signed a definitive agreement to acquire the subsidiaries of SeedInvest, an owner of a registered broker/dealer and operator of the largest equity crowdfunding platform in the United States.
We believe more traditional assets will become securitized through tokenization, and that includes shares in companies, debt and other lending contracts, and other forms of property and value. The acquisition, which is pending regulatory approval, would help us build toward a vision where capital formation can be achieved for businesses of all sizes over the internet using open and interoperable financial rails, with access to invest in these businesses and securities offered to retail and institutional investors globally through open digital asset markets.
Circle Platform: Making it Happen Behind the Scenes
Behind the scenes we’ve continued to craft and refine a flexible, extensible set of platform services that all of our products can be built on top of, as illustrated below.
The Circle Platform is the very first thing we started to build at Circle more than five years ago and everything we have done subsequently has leveraged it in some fashion — internally through our robust risk, compliance, support, and back office financial tools as well as externally in the form of customer-visible products. Building on such a platform enables us to innovate and deliver products and services efficiently that serve multiple use cases and customer needs.
Walking into 2019, the Circle Platform is delivering major new services for identity, risk, custody, on-chain transaction management, fiat tokens, and core exchange services. These new platform services will help unify our product experiences and accelerate new feature development. Over time, we will also surface more of these services directly to third party partners and developers.
Growth in Institutional Adoption
2018 was also a year of significant penetration into the institutional market for all three of our institution-grade flagship products (Circle Trade, Poloniex, and USDC). Circle now proudly partners with over 1000 institutional clients including asset managers, OTC desks, exchanges, token projects, family offices, high net worth individuals, and endowments in the Americas, Asia, the Middle East and Europe.
We grew our institutional sales team 3x, bolstered our client services team with dedicated account managers for each institutional product, and created a dedicated marketing team for our institutional product suite. The institutional markets team hosted, sponsored, and spoke at more than 90 events around the globe in 2018.
We launched Circle Research in the second half of 2018 and initiated coverage on seven crypto assets in the first two months of the program alone. Moreover, thousands of institutional subscribers and followers around the world have subscribed to receive Circle Research’s daily and weekly research notes. We are very proud of the depth and quality of Circle Research and have high expectations for it in 2019.
Overall in 2018, institutional involvement in crypto grew steadily and incrementally rather than in the major sweeping manner some in the industry had exuberantly predicted. This year, we anticipate further incremental growth in institutional adoption catalyzed by stablecoin usage, advancements in institutional custody solutions, increasing regulatory clarity particularly in the U.S., and improvements and innovation in core crypto infrastructure.
Legal, Compliance and Public Policy Leadership
Delivering all of these products and services requires an enormous amount of ongoing legal, compliance and public policy work. Since our founding, we’ve taken a leadership position on policy and regulatory issues, and as our agenda has grown, so too have our efforts in these areas.
2018 included many significant achievements in these areas, including:
Established the previously-noted Circle Asset Framework to facilitate new listings and features on Poloniex, Invest, and Trade.
Drove industry efforts to move US legislation to be more crypto forward including serving as leading participant in the only congressional roundtable in this space.
Established the Blockchain Association, the first industry association for blockchain and crypto companies designed to advocate for the industry with Congress and agencies of the US government, including the SEC.
As a founding member, joined Global Digital Finance, an industry body driving the acceleration and adoption of digital finance to support the next era of digital commerce, dedicated to the advancement of next-generation technologies in finance for society, and helped draft the GDF Code of Conduct.
In the United States, maintained high level engagement with the Securities and Exchange Commission, the Commodities Futures Trading Commission, and other government agencies to further Circle’s regulatory agenda and achieve regulatory clarity in the US, and discussed crypto issues with representatives from states including New York, California, Illinois, Massachusetts, and Utah.
Worldwide, maintained high level engagement with Hong Kong Securities and Futures Commission, the Monetary Authority of Singapore, the UK Financial Conduct Authority, the European Securities Markets Authority, other UK, EU, and French authorities (including HMT, the AMF, the ACPR, the European Parliament, the European Commission), and other international securities, monetary, commodities, and financial crimes authorities.
Served on the Fintech Board of Advisors to the IMF, including providing perspective on how fiat money can become issued as digital currency and accessible globally.
Circlers: The People Leading the Accomplishments
Over the course of 2018 we continued to invest most heavily in Circle’s greatest asset: extraordinarily talented people. Nearly 150 people joined us across seven offices, roughly doubling our collective team size around the globe. We also applauded the arrival of 11 Circle babies during the year!
In the past 12 months alone, new Circlers brought professional pedigrees ranging from top technology companies including Google, Square, Wayfair, Salesforce, Adobe, Intel, and TripAdvisor; to the world’s leading financial institutions including JPMorgan, Goldman Sachs, Fidelity, Santander, Credit Suisse, and Deutsche Bank; to regulatory bodies such as the Hong Kong SFC and the United States Department of Homeland Security, the SEC and FINRA.
In our experience, the world’s most valuable and interesting technical opportunities are fundamentally people opportunities: We aim to deliver products and services that improve people’s lives, and we aim to do so alongside people we respect, admire, teach, and learn from.
Circle’s culture thrives on internal transparency, intelligence, hard work and execution under pressure, and approaching problems and volatility not only with great skill and care, but also with kind curiosity, creativity, respect, immense resiliency, and relentless customer focus.
To our employees: Thank you. We are humbled to be building alongside you and to learn from you every day.
As we emerge from an accomplished yet challenging and educational 2018 and steer strongly into 2019, our sixth year in these still early days of crypto finance, we’re more focused and enthused than ever about the value that crypto stands to bring to people everywhere, all over the world.
Regardless of recent market headwinds, Circle specifically is poised to grow its leadership role with unique depth of talent, technology, regulatory approach, and diversity of product and service offerings as crypto evolves toward its true potential.
We envision an open internet of finance that will transform and integrate the world more deeply, eventually eliminating artificial economic borders and enabling a more efficient and inclusive global marketplace that connects every person on the planet. We see the future of the global economy as open, shared, inclusive, distributed, and powerful — not only for a few chosen gatekeepers, but for all who connect.
Thank you for 2018 and here’s to a productive and prosperous 2019!