By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - U.S.-based Circle Internet Financial Ltd, a social payments app backed by Goldman Sachs (NYSE:GS), said on Wednesday it will no longer allow customers to buy and sell bitcoin because it has failed to become a meaningful part of its business.
"Using bitcoin for speculative trading or people buying and selling bitcoin because they think it's fun -- that's not an interesting business for us," Jeremy Allaire, Circle's chief executive and co-founder, said in a interview with Reuters.
"It's a distraction to have to support these customers given that our growth has been on our social payments business."
Instead, customers will be directed to digital asset exchange Coinbase if they want to buy and sell the digital currency. Customers, however, can still continue to store bitcoin using the Circle app and can still convert bitcoin stored via the service to dollars, pounds or euros and continue sending money via social messaging, without fees.
Allaire has also been disappointed with the lack of progress in bitcoin's technology.
"A few years ago when we started the company, bitcoin is the only digital currency technology that mattered," said Allaire "We obviously envisioned it as a mainstream phenomenon and we had expected more progress in terms of technology development, but the development has slowed in the last three years."
Circle then decided to develop its own technology, Allaire said, as the company announced the launch of Spark, an open source project that provides a way for digital wallets to exchange value using blockchains, including bitcoin.
Blockchain, the technology that has powered bitcoin, has exploded over the last two years due to its usefulness in recording and keeping track of assets across practically all industries.
The initial focus for Spark is to connect digital wallets or accounts around the world while ensuring that full compliance requirements are met.
Circle formed partnerships in two new markets -- South Korea's Korbit and the Philippines' Coins.ph, Allaire said. Using Spark, Circle customers in the U.S., UK and Europe will be able to send and receive value with those in Korea and the Philippines using distributed ledgers. Circle said international payments will be as easy as sending a text or email messages.
Circle has raised about $140 million since inception more than three years ago.
Allaire said the company is on pace to do more than $1 billion in payment transfers for 2016. Its growth over the last year in terms of user accounts, transactions, as well as, cross-currency activity "has been in the 300-400 percent annualized growth range."