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Circle launches a Coinbase competitor in the United States

Circle launches Circle Invest in the United States except NY, MN, HI and WY. The application is now available in the App Store and the Play Store and allows you to instantly exchange the most popular cryptocurrencies at no cost.

Circle Invest is not exactly an exchange because the application hides most of the complexities you can find on full fledged exchanges. You can not submit limit orders or consult the order book. You can only deposit and withdraw money, buy and sell crypto-currencies at market prices.

Circle Invest currently supports Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic and Litecoin. The company will have to overcome some regulatory challenges to roll out its product in the last four states.

In other words, Circle Invest is more like Coinbase – a simple service that allows you to buy cryptocurrencies without any complicated options. But the main difference with Circle Invest is that the new service has no fees.

ACH transfers from your bank account to your Coinbase are free, but the exchange of USD on your Coinbase account against a cryptocurrency costs 1.49%.

On Circle, ACH transfers are also free, and you can start buying cryptocurrencies instantly for transfers under $ 10,000. If you transfer more than that, you will have to wait a few days. After that, the exchange of USD on your Circle account in cryptocurrencies is free.

But what about the spread? Yes, the price is different if you buy or sell bitcoin (for example). Circle does not try to hide this and says that you can expect a 1.5 to 2% difference between the purchase price and the selling price.

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As on all stock exchanges, nothing is free even if there is no charge. Coinbase also says that you can expect a spread of 0 to 2%.

While most people already know Circle for its consumer-friendly Circle Pay app, the company operates a trading desk called Circle Trade. This product connects to multiple exchanges and provides liquidity to these exchanges and major cryptocurrency investors.

According to a recent Fortune report, Circle Trade manages $ 2 billion a month in transactions and recently generated $ 60 million in revenue in just three months.

And that's the key to understanding Circle's strategy. The company has also acquired Poloniex and will soon launch its own full exchange. All of these products are powered by the company's own trading desk.

While companies like Robinhood or Revolut also promise cryptocurrency trading at no cost, they do not have their own exchange. They act only as a broker with other exchanges. Circle is slowly building a full-stack blockchain company, from the trading desk to the fiat currency peer-to-peer payment application.

Disclosure: I own small amounts of various cryptocurrencies.