Circle’s China unit operates as a separate locally incorporated company and has not yet launched a product, pending a deal with a local banking partner and a legal license to operate. Circle’s co-founder Jeremy Allaire said “The latest funding comes from existing investor and Beijing-based tech investment fund IDG Capital Partners, as well as Chinese firms including Baidu, CICC Alpha and Everbright Investments”. This allows the sending of fees to countries where it hasn’t yet launched, with the fee transferred into bitcoin, then settled within minutes via the blockchain network that validates bitcoin transactions. At the other end, the bitcoin is transferred back into the currency of that particular country.
Circle’s goal in China is to combine clients there with this new global means of making small or social payments to peers in other countries. China has in the past shown wariness towards to the bitcoin virtual currency whose usage underpins some of Circle’s transfer of payments, blocking banks from trading the currency in December 2013 on concerns it was being used for money laundering.
Early this year, the People’s Bank of China said it wanted to launch its own digital currencies to cut the costs of circulating traditional paper money and boost policymakers’ control of money supply. The company, which launched in the United States at the end of last year and counts Barclays and Goldman Sachs among its supporters, allows cross-currency transfers of pounds and dollars at rates that it says are better than other money transfer businesses.