Circle chooses crypto-friendly France for its European headquarters

by Arthur · March 21, 2023

(Bloomberg) — Stablecoin giant Circle Internet Financial Ltd. plans to locate its European headquarters in Paris, citing the crypto-friendly climate created by President Emmanuel Macron’s government as contributing to the decision.

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The American company will use Paris as a base to expand in the EU, Circle CEO Jeremy Allaire said in an interview. It will build on Circle’s existing footprint in Dublin and London.

“Both for commercial and political reasons, we believe that France is the right center for us as we look to scale this business in Europe,” Allaire said, saying Paris would become a base for its digital assets and for on-shore the new the product. EUROC, a stablecoin that aims to be redeemable one-to-one with euros.

The announcement of the new headquarters during Paris Blockchain Week comes at a challenging time for Circle. Its flagship stablecoin product USD Coin lost its dollar value for several days this month after Circle revealed it had $3.3 billion in cash reserves for the token temporarily trapped in Silicon Valley Bank, which it now stores at Bank of New York Mellon.

Circle has submitted an application to the French market authority to be registered as a digital asset service provider, and to the banking authority to become a licensed electronic money institution, Allaire said.

Circle is the latest major crypto company to choose Paris as a European hub, after digital asset exchange Binance Holdings Ltd. and Crypto.com have made similar promises for the past two years. French digital minister Jean-Noël Barrot said in an interview that Circle’s decision was the result of efforts “to make France the most attractive place” to develop cryptoassets and blockchain technologies.

France established a regulatory framework for crypto in 2019, with a simple registration process for companies. This required companies to provide evidence of managers’ “good reputation and skills” and establish procedures to combat money laundering. About 65 players have registered so far, but after the collapse of the crypto exchange FTX, the vetting process has been strengthened.

Companies entering the market from January 2024 will be required to disclose pricing policies and risks of cryptoassets to clients, as well as the need to place clients’ deposits in separate accounts from the company’s. Meanwhile, the EU’s Markets in Cryptoassets framework, which will enable firms to submit registrations across the bloc, is due to come into effect later in 2024.

The FTX scandal and the global context have not dampened France’s efforts to attract crypto investment, Barrot said. “There have been some recent developments in the crypto space that confirm the approach that we have, that Circle has, that you need good regulation for this market to develop in a sustainable way,” he said.

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Total circulation of Circle’s USDC fell about $8 billion so far in March to $35.6 billion on Tuesday, according to price data from CoinGecko, after peaking at $44 billion before the recent bank shutdowns.

Without commenting on a specific headcount in Paris, Allaire said Circle was making its first hires in the country, focusing on technical and financial roles. “So many companies in the financial industry have made Paris their home in a post-Brexit world,” he said.