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In contrast to Bankman-Fried’s shirt, shorts and stuttering bedhead routine, there’s nothing defiant about Allaire, who dresses smartly and keeps his coiffed hair tight for a Jean-Luc Picard-esque smooth pate. And he tends to speak in full paragraphs, sounding more like a crypto professor than a typical crypto bro.

“If we want people to participate in this technology and these markets in the United States, we need to have clear regulation,” Aller said in an interview. “People won’t trust an opaque offshore company called Hydra, or whatever you want to call it. They won’t want to trust it because they’ll fear there are no rules.”

Despite all that has collapsed in crypto, Circle had its best quarter ever, with revenue 10x year-over-year and $43 million in profit. says the company’s press release. The outstanding market value of most digital currencies has fallen, but the total value of Circle’s US Dollar Coin, or USDC, is steady at $45 billion, slightly higher than a year ago.

The region’s largest crypto company still has a long way to go. But for now, chalk it up to a victory for old-fashioned Boston fiscal conservatism, the spirit of prudence that spawned the early banks, the first mutual funds and the titanic money market funds of Fidelity Investments.

Instead of creating another volatile digital currency that trades freely, Circle’s USDC is backed dollar-for-dollar by a reserve asset known as a “stablecoin” where the price must remain fixed. Users pay $1 to generate $1 USDC, and Circle primarily makes money by collecting interest on deposits. (Circle’s upside with USDC is limited, though: not even Elon Musk’s crazy tweets can drive the price up. Boring T-bills and bank deposits.

Circle has “played by the book as far as crypto companies go,” says the Columbia Business School affiliate. Professor Omid Malekan, who follows the industry, believes that stablecoins are the “killer application” of blockchain technology, a breakthrough that will become even more popular and useful. “Circle could do well as crypto becomes more regulated and institutionalized,” he said.

While Bankman-Fried and other crypto players were based offshore to avoid regulation, Circle stayed in the United States and partnered with Bank of New York Mellon, the world’s largest money custodian, to hold its reserve assets, and hired BlackRock the largest amount. manager to manage the portfolio.

Circle has partnered with Bank of New York Mellon, the world’s largest money custodian, to hold its reserve assets.Mark Kauzlarich/Bloomberg

Even at the height of the market boom, when Aller tried to merge with a blank check company and go public, as many tech companies have done, he chose one led by banking legend Bob Diamond, the former CEO of Barclays. (Circle terminated the deal this month due to market conditions.)

“Circle is the ‘white hat’ of the industry,” said David Orfao, a venture capitalist at General Catalyst who has backed Allaire in multiple ventures. “The one thing that Jeremy always focused on was: How do we become regulated to be accepted into the financial system?’

On a walk along the Charles River with a reporter this fall, Aller explained how his three-plus decades of Internet experience and two previous startups have equipped him to fight the crypto mega-crash.

Born in Philadelphia to social worker parents, Aller moved to Winona, Minn., as a young man. Along with his older brother JJ, he was obsessed with early personal computers, manually typing video game programs from the code behind Byte magazine.

He went to Macalester College in St. Paul, Minn., where he majored in political science and philosophy, developing a keen interest in the structure of political and economic systems. In college, he used the Internet to connect with people in the former Soviet Union to learn firsthand about the fall of communism. He later helped MIT professor Noam Chomsky put his political works online.

Simeon Simeonov, who met Aller at Macalester, said his friend was always deeply curious. Simeonov’s work-study work was in the student computer laboratory, where Aller spent a lot of time.

“His view of the future is pretty accurate, but it’s not unique,” said Simeonov, who previously worked at Allaire and is now the chief technology officer of AI startup Real Chemistry. “His superpower is that he can explain it and get top people on his side.”

Allaire’s first startup, Allaire Corp., developed software in the 1990s to enable websites to go beyond posting articles to include applications and services. VC firm Polaris, which supported the startup, presented an ultimatum. Move the company from Minnesota to the West Coast. But Aller’s most productive meetings have been with East Coast founders and investors. So the company moved to Boston, and Aller never left.

Allaire Corp. went public just before the Internet bubble popped and was bought by Macromedia, which was itself. purchased by Adobe. As Adobe’s chief technology officer, Aller began to see the potential of online video. That led to his second startup, Brightcove, which helped companies post web videos and ads. It suffered from the Great Recession, but was published in 2012.

After the recession, Aller went down the rabbit hole of researching the roots of the crash and the nature of the currency that eventually led him to bitcoin. In 2012, he began talking about crypto with Sean Neville, a software developer who had worked at Aller’s first company and was mining bitcoin on his own computers.

Jeremy Aller, CEO of Circle Internet Financial, sits on the banks of the Charles River in Boston. David L. Ryan / Globe Staff

Aller recalled the moment when “suddenly, like, millions of dots connect.” He and Neville came up with the idea for Circle, which they called a “bitcoin bank.” When they pitched the idea to VCs in Boston, they got a great response. “It totally sounds like that [expletive] crazy and probably not a good idea,” Aller recalls being told.

But they beat out General Catalyst’s Orfao, who was CEO of Allaire Corp. and invested in Brightcove, plus Jim Breyer, one of Facebook’s earliest backers.

Circle’s first product was called Circle Pay, kind of like PayPal or Venmo, but for Bitcoin transactions. But the app was surrounded by fraud, a ubiquitous threat in the crypto universe. So in 2017, Circle refocused on helping large funds and investors transact crypto with a product called Circle Trade. It was an auspiciously timed venture; Bitcoin was in one of its periodic upswings, the price of one went from $1,000 to almost $20,000. that year.

Circle Trade’s success led to Aller’s biggest mistake, trying to expand into brokerage transactions for the average investor. Circle paid $400 million in February 2018 to acquire a retail brokerage called Poloniex. Tons of commercial activity poured out of China, some likely violating sanctions against North Korea, Syria and other rogue states.

Today, Aller describes the brokerage as “garbage fire after dumpster fire,” but at the time it “seemed like the best deal ever.” As the price of bitcoin collapsed and regulatory investigations piled up, Circle’s brokerage division posted a $157 million loss in 2019. Last year, the SEC settlement cost the company $10 million and settlement negotiations with the Treasury Department’s enforcement division, called the Office. The control of foreign assets continues.

Instead, Aller turned to stablecoins and created USDC. Likening the startup experience to mountain climbing, Aller said he learned his lesson. “It can be treacherous. There are near-death experiences and you literally have to turn around.”

Those pivots took a toll on Circle’s workforce, which grew to 400 during the Poloniex era before shrinking to 60 in early 2020. USDC has since soared, growing from $400 million to $4 billion in 2020 and reaching $40 billion. until the end of 2021. Today, the company employs more than 900 people, including more than 80 in Boston.

Ultimately, USDC can be used for more financial transactions. However, that continued success is by no means guaranteed. After FTX failed, lawmakers could impose regulations so strict that Circle couldn’t make money or expand. And the Federal Reserve has talked about the US government issuing its own federal stablecoin. (Or, in the absence of new rules, Circle could make potentially risky investments with the USDC reserve fund, jeopardizing the company’s sober and reliable brand.)

The FTX mess “only increases the urgency” for Congress to pass new rules on stablecoins, Stanford business professor Darrell Duffy said. USDC has done well, but “even better stablecoins can be designed.”

is a common theme in Allaire’s companies application of software in new markets. Allaire Corp. allows websites to out-host content. Brightcove made online videos more dynamic. And Circle is ultimately trying to reinvent how money changes hands.

“We still haven’t gotten to the 1.0 we set out to work on,” Aller said. “This is just a drop in the bucket.”

Aaron Pressman can be reached at [email protected] Follow him on Twitter @ampressman:.


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