Fintech company Circle is branching out with new ideas in the cryptocurrency space. Last week the Goldman Sachs (GS  ) and venture capital-backed startup closed a $110 million fundraising round to reach a $3 billion valuation. Participating investors included Bitmain Technologies, IDG Capital, Breyer Capital, General Catalyst, Accel, Digital Currency Group, Pantera Capital, Blockchain Capital, and Tusk Ventures. The crypto unicorn has a few new product ideas.

First, Circle is exploring the concept of a stablecoin, a non-volatile cryptocurrency with a constant exchange rate. The most famous example of a stablecoin is the controversial Tether (USDT). Circle recently announced plans to create Circle USD Coin (USDC), a token pegged to the US dollar that is compliant with financial regulations. Circle CEO Jeremy Allaire stated: "It unlocks an incredible amount of power for the dollar. It's basically a dollar that operates on blockchain." He added that a few banks and financial institutions are interested in working with Circle's stablecoin. The token will aim to be based on Ethereum's ERC20 standard, be backed one-to-one by dollars, and be audited and verifiable. Circle plans to add USDC to the Poloniex exchange when it becomes available in the summer.

Circle has also launched a new service with its Circle Invest app. The app's new "Buy the Market" feature includes an option to buy all of the coins available on Circle Invest, in a collection weighted by market capitalization. The coins include Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Monero (XMR), Ethereum Classic (ETC), and Zcash (ZEC). BTC and ETH comprise over 59% and 26% of the basket, while ETC and ZEC are at less than 1% each. Bloomberg reports that Allaire wants the service to be geared toward crypto newbies looking for passive management.

The hidden catch of "Buy the Market" and Circle Invest is twofold: no real ownership and a wide bid-ask spread. Buyers of coins on Circle Invest do not actually have access to the private keys and cannot transfer them to external wallets. Effectively, Circle owns the coins, not the investor. Circle Invest also assesses a 1% bid-ask spread, so users lose 1% of their portfolio's value immediately after buying. These factors make Circle Invest less appealing than more well-known exchanges like Coinbase/GDAX and Binance. Still, Circle Invest's "Buy the Market" might be easier to use for someone who has no crypto experience.

Circle's recent exploits reveal a large potential market for compliant stablecoins and crypto index funds. With Tether mired in controversy, it is no wonder other companies are looking to create the next big stablecoin. Convenience for customers is also a major selling point for features like "Buy the Market" and similar upcoming index funds.

The author owns a small amount of BTC and LTC.