While digital currencies backed by some tangible asset have met with only limited success (see, Venezuelan petro), that’s not for lack of trying. The latest entrant is Boston-based Circle Internet Financial, which announced Tuesday that it has received $110 million in a series E funding round from Beijing-based bitcoin-mining hardware maker Bitmain.

Circle plans to use the investment to launch a “US Dollar Coin” (USDC) that uses the Ethereum blockchain and that will be backed by real U.S. dollars. According to Circle co-founder, board chair and CEO, Jeremy Allaire, the new investment lifts the company’s valuation to around $3 billion.

Also participating in this financing round were existing investors IDG Capital, Breyer Capital, General Catalyst, Accel, Digital Currency Group and Pantera, along with new investors Blockchain Capital and Tusk Ventures.

According to co-founders Allaire and Sean Neville, Bitmain will become a partner in Centre and join in the effort to “introduce multiple fiat-backed stablecoins and provide financial interoperability around the world.”

One of the biggest issues that digital currencies face is volatility. A cryptobuck may be worth one amount when you buy it and either more or less when you sell it. In that scenario, the currency is more like an equity.

But when it comes to transactions, when a vendor charges $1,000 it expects to be paid that amount, not a little more or a little less. By pegging the USDC to the dollar, the volatility issue is solved. But then, why not just pay in dollars in the first place?

From Circle’s press release announcing the funding:

Circle USDC [provides] detailed financial and operational transparency, operating within the regulated framework of US money transmission laws, and reinforced by established banking partners and auditors. It is built on an open source framework with an open membership scheme that eligible Financial Institutions (FI) can participate in (CENTRE). USDC will be ERC-20 tokens minted, issued, and redeemed based on network rules defined by CENTRE.

Circle itself will mint USDC tokens that meet specifications for “stablecoins” set Centre, which is currently a wholly owned subsidiary of Circle. At some point in the future, Centre will facilitate the transfer of payments between fiat currencies and any number of cryptocurrencies by converting the cryptobucks to dollars, euros, yen or whatever.

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