BlackRock, Fidelity invest in Circle Internet's $400M funding round

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Financial giants BlackRock (NYSE:BLK) and Fidelity Management and Research have agreed to participate in a $400M funding round for Circle Internet Financial, showing that traditional finance firms deem it necessary to gain a foothold in the cryptocurrency space.

BlackRock (BLK) will serve as primary asset manager of USCoin (USDC-USD) cash reserves and is forming a broader partnership with Circle to explore capital market applications for USDC.

"Dollar digital currencies like USDC are fueling a global economic transformation, and Circle's technology infrastructure sits at the center of that change," said Jeremy Allaire, co-founder and CEO of Circle.

Marshall Wace and Fin Capital are also part of the funding round, which is expected to close in Q2 2022.

The new funding will support Circle's growth as demand for dollar digital currency and related financial services continues to scale globally, the company said. USCoin (USDC-USD) is one of the fastest-growing dollar digital currencies with more than $50B in circulation, Circle said.

USCoin (USDC-USD) is the second largest stablecoin by market cap after Tether (USDT-USD), according to CoinMarketCap data. A stablecoin is a digital asset that's normally pegged to a fiat currency such as the U.S. dollar.

In February, the Federal Reserve Bank of New York suggested that tokenized deposits would be a better form of payment than stablecoins. Keep in mind that last year, the President's Working Group on Financial Markets recommended that Congress should regulate stablecoins.