Circle Buys SeedInvest to Build Security Token Marketplace
Circle, a Boston-based digital asset exchange operator who is backed by Goldman Sachs, has progressed at a staggering pace throughout 2018. Their most recent addition features the licensed broker-dealer SeedInvest, which can potentially give Circle a significant competitive advantage in the race towards tokenized securities.
The Impressive Timeline of Circle’s Operations
In May of the same year, Circle provided details of a $110 million investment round, which skyrocketing its valuation to $3 billion. The newly raised funds paved the development of a USD-backed stablecoin, abbreviated as USDC.
The trading of USDC started in September, just four months later.
Most recently, Circle has acquired internet crowdfunding giant SeedInvest. Since its founding in 2012, SeedInvest has helped start-ups raise more than $120 million. Based in New York, the firm enables potential investors to browse various businesses and, if eligible, to purchase a slice of their favorite project.
Circle’s Aim for a Security Token Marketplace
Perhaps most attractive however— from Circle’s perspective— is SeedInvest’s ability to operate as a broker-dealer. Such an acquisition could allow Circle to do everything that SeedInvest does, but with digital assets, known as security tokens.
According to a recent Bloomberg television interview with Circle CEO Jeremy Allaire, this looks to be precisely what they have their sights on.
“Our belief is that you know, tokenized assets— so using cryptographic tokens and smart contracts to create new types of assets— is going to continue to grow and in fact we think over time there will be hundreds of thousands, if not millions of tokenized assets that people are issuing, trading, and exchanging, all around the world.”
Allaire went on to outline how the previous acquisition of Poloniex came with a certain outlook. Circle wants to build a token marketplace where businesses— and eventually individuals— can issue, distribute, and trade tokenized assets.
How SeedInvest Completes Circle’s Future Vision
Prior to their purchase of SeedInvest, they lacked two critical components, according to Allaire.
The first dealt with the need to operate as a broker-dealer within the regulatory framework of the SEC. The current ambiguous framework has paralyzed much of the security token community, making compliance increasingly difficult.
The second involved an end-to-end platform to help businesses and to manage STOs. More specifically, this ‘help’ would entail marketing, generating awareness, and most importantly, finding investors.
These two components are precisely what SeedInvest brings to Circle.
“The power of tokenization is that more and more types of assets can be represented in a liquid, tradeable form. It’s also very powerful because in theory it creates a way for smaller businesses and mid-size businesses to more directly raise capital. And I think part of the benefit is that you can make those assets available through global markets, over the internet, and make those available not just to accredited investors but also to mainstream investors and unaccredited investors. And that’s something I think SeedInvest really pioneered.”
Allaire’s vision for the future of tokenized securities remains firm. And with his company’s recent acquisition of SeedInvest, it’s difficult for anyone to remain pessimistic. As Allaire concluded,
“Crypto securities are going to become a major new category of securities that ultimately every business is going to adopt, just like every business has a website. […] It’s not just ‘how do we let companies do ICOs?’ It’s ‘how do we support the tokenization of everything?”
What do you think of Circle’s operational progress throughout 2018? Will they develop into a major player as regulated tokenized securities unfold? Let us know what you think in the comments below.