Circle Internet Financial, Ltd., a long term go-to place to buy small amounts of bitcoin with a credit or debit card, is no longer going to be a go-to place to buy bitcoin at all. According to an ultra-confusing blog post on the topic, they have decided they are "more than ever" not a bitcoin exchange and as a result will be reallocating resources that support bitcoin trades to do something else unrelated and handing their bitcoin business over to Coinbase.
If that summary doesn't provide crystal clarity, give their opening statement a try:
Today we’re announcing the launch of full messaging features in Circle’s apps and higher deposit limits for customers, forthcoming support for sending and receiving money between Circle and The Philippines and Korea, and the introduction of Spark, a new blockchain-based protocol to facilitate trusted, compliant money transfers between participating individuals and institutions over the Bitcoin network. As part of this launch, we are also eliminating the ability for customers to buy and sell bitcoin directly on Circle, and introducing a new preferred bitcoin exchange partnership with Coinbase.
Sounds like good news for Coinbase anyway. However, this pretty much ends any use of Circle for many users, yours truly included. I used Circle strictly for purchasing bitcoin and as a mobile wallet so as a result of this new direction the company is taking, I will no longer be using Circle for anything at all.
Instead Circle plans to steer the company into the overcrowded person-to-person money transfer business saturated with mobile apps and online services. The only difference is that Circle intends to continue making use of the Blockchain (bitcoin) to facilitate this. Which is cool and all, but we have to point out that this is a different target group of customers so whereas this is still somewhat supportive in the industry, this leaves a large customer base hung out to dry.
Bitcoin Exchange Model
Without any knowledge of the inner-workings at Circle it's impossible to speculate past what the blog post states, however, the direct bitcoin sales at spot costs with a minuscule margin of profit has been perplexing for some time. In general, buying bitcoin with a credit card is an endeavour that one can expect a steep margin of anywhere from 10% to 30% with various markets and re-sellers, yet Circle was doing this for about 2%. Combine that with the fraud prevention and compliance with regulatory frameworks, its hard to see where the profit was. Perhaps this change allows them more room in that regards and as a result, they'll be more profitable.
The blog goes on to talk about messaging apps and a Spark framework among other things, but you have to get past the "slap in the face" of the opening statement to consume the additional information and for many Circle users, there's just no point in doing so since they don't use or have no plans to use other applications the company offers.
Circle has hinted a few times to the fact that they were heading in this direction and have finally made good on their intentions.
They do make an attempt to explain how they will still be involved in the industry and continue to be supportive of its innovation to the point of even using the blockchain for their new applications, however, the summary of the announcement is overwhelmingly eclipsed with a "Circle is out of the bitcoin business" tone.