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Cryptocurrency was invented to enable anyone across the globe to store, send, and receive money over the internet. Therefore, it is somewhat ironic that crypto startups - built on the ideals of banking the unbanked - are finding it difficult to access traditional financial services and payment processing.
The majority of traditional banking institutions are reluctant to provide business banking services to crypto companies.
In some countries, regulations prohibit financial institutions from serving crypto startups. But, for the most part, banks either consider crypto companies too risky to take on as clients or consider digital currency as a threat to their business model.
Whatever reasons banks may have that prevent them from extending their services to crypto startups, the inability to open a business bank account has been a major challenge for the cryptocurrency industry.
Unfortunately, the same often goes for payment processing providers. Many online payment services are disinclined to serve companies dealing in cryptocurrency, which poses yet another challenge for startups in this space.
Fortunately, the emergence of dollar digital currency provides a new way for crypto startups to bank, process payments, and manage their treasury operations.
Dollar digital currency like USDC, also known as dollar stablecoins, enable businesses to hold, send, and receive digitized US dollars. For crypto startups struggling with access to reliable banking services, stablecoins offer a much-needed alternative.
First and foremost, dollar digital currency allows startups to bank without a bank. In the crypto industry, that’s a big deal. The reluctance of legacy financial institutions to serve crypto companies had led to startups going “crypto-only” but typically in volatile assets such as BTC or ETH.
Using USDC, crypto startups can remain crypto-native while obtaining many of the benefits of a traditional bank account using Circle’s products. From securely storing digital dollars to accepting traditional payments from customers (like credit card, debit card, ACH and wire) and processing global payouts, Circle provides a full-stack payments & banking infrastructure for crypto startups.
Crypto is global. The same goes for crypto startups. Remote working, global partnerships, and an international customer base are standard for companies in the crypto industry and require startups to have the ability to make cost-efficient global payments.
Using USDC, companies can seamlessly process cross-border payments without traditional banking relationships or the need to wait days for a transaction to settle. USDC payments take a few minutes and typically cost only a few dollars, if not cents.
Crypto startups operating blockchain protocols that involve multi-dimensional payments require payment rails that can handle these types of payments. Traditional payment providers are typically not able to handle microtransactions and automated payouts.
Fortunately, for startups running decentralized protocols, USDC - combined with Circle’s products - allows for multi-sided payouts globally. Circle products can be easily integrated into blockchain applications to enable smart contract-powered, automated payments and microtransactions to support a vast array of payout scenarios. Additionally, Circle products can also be leveraged to process traditional currency payouts in the form of international wire transfers in 80+ currencies and ACH payments domestically in the U.S.
On and off-ramps also play an essential role for companies dealing in cryptocurrency. Whether it is accepting customer payments, managing treasury operations, or making B2B payments, crypto companies need a payments infrastructure that supports both traditional and crypto payments. For that, on and off-ramps are required to be able to move in and out of crypto.
Circle Account holders can leverage a suite of API products to easily move from fiat currency into digital dollars and back programmatically.
Finally, USDC holders also have the ability to earn yield on their digital dollars - typically at a higher rate than they would for dollars held in a traditional bank account. Decentralized finance (DeFi) protocols provide yield-generation opportunities for companies holding USDC without lengthy lock-up periods. Additionally, Circle will roll out platform-native CeFi yield products to enable Circle customers to earn yield on digital dollars held with Circle soon.
Forward-thinking crypto startups are already adopting USDC as part of their payments infrastructure and treasury management operations because of the wide array of benefits it offers.
Let’s look at some of these benefits in more detail in the following stablecoin use cases for crypto-native companies.
Blockchain gaming applications, decentralized finance protocols, blockchain-powered marketplaces all require a fiat currency on-ramp to expand their customer base beyond the crypto community. In other words, they have to be able to accept traditional payment methods.
Using USDC in combination with Circle Payments, crypto startups can accept payments via traditional payment rails such as bank cards, ACH and wire transfers in 80+ currencies that automatically settle in USDC.
That means a DeFi-curious investor looking to earn yield on US dollars, for example, could load up his DeFi wallet using his bank card to then place USDC in a lending protocol to earn interest.
Crypto companies that process a substantial amount of transactions in cryptocurrency are typically included to hold funds in crypto. However, prudent treasury management typically involves reducing FX risk, which means volatile cryptoassets are not ideal.
Conversely, USDC can be securely held by cash-heavy companies that want to remain in crypto but without the market risk.
Furthermore, company treasuries can utilize different wallets for different payment purposes, including custom and complex account management and fund flows.
An online marketplace that sells digital goods, for example, needs to process multi-sided payouts globally to thousands of marketplace participants. Not only does this pose a challenge for traditional payment providers, but it also poses a cash management challenge for companies.
Using USDC in combination with Circle Payouts, however, a marketplace operator can process pre-programmed, multi-dimensional payouts directly from dedicated wallets in a secure and transparent manner.
Most crypto startups are remote-first. Following the outbreak of the pandemic, virtually all crypto companies have started to embrace remote working. And given the global nature of crypto, most companies also operate international teams.
Processing payroll payouts - in the old world - means multiple payment providers, payment rails, and banking relationships. For crypto startups, that is not an easy feat due to legacy’s financial institutions’ unwillingness to deal with crypto. And then there is the time and cost of setting up multiple payment rails to handle payroll payouts.
Fortunately, for crypto companies, global payroll payouts can be seamlessly processed using USDC and Circle’s Payments and Digital Dollars Accounts products.
For example, a New York-based digital asset exchange could process all of its international payroll payouts using USDC without the need for international banking relationships or multiple online payment providers. USDC transfers only take a matter of minutes and are much more cost-efficient than the vast majority of today’s cross-border payment providers.
Circle offers blockchain companies a crypto-native, US dollar-based payments infrastructure that can be easily implemented and doesn’t require traditional banking relationships.
- Jeremy Allaire, Circle CEO
USD Coin (USDC) is the fastest-growing, fully reserved dollar digital currency with over $49 billion digitized dollars in circulation as of April 27, 2022.
USDC is fully backed by cash and short-dated U.S. government obligations, so that it is always redeemable 1:1 for U.S. dollars. USDC reserve assets are attested monthly by global accounting firm Grant Thornton LLP to ensure the highest level of trust and transparency.
Startups developing decentralized protocols with smart contract-based payments can seamlessly integrate digital dollar payments into their automated payment flows using USDC.
Crypto startups adopting USDC can benefit from opening a Circle Account and utilizing the suite of Circle products to integrate a full-stack, dollar-native payments infrastructure into their business.
Circle’s product suite enables crypto startups to accept credit and debit card payments, send and receive bank transfers in multiple currencies, and manage all funds in digital dollars held securely in their account.
Crypto companies struggling to gain access to banking services or looking for seamless banking-to-blockchain integration can opt for USDC and receive many of the same benefits that banks provide but in a crypto-native manner.