Circle’s Acquisition of SeedInvest Gets Green Light from FINRA
As of March 4th 2019, FINRA has officially approved Circle’s purchase of registered broker-dealer SeedInvest. As one of the United States’ largest crowdfunding platforms, SeedInvest will be utilized by Circle to implement their vision of tokenized securities.
Details of FINRA Approving Circle’s Purchase of SeedInvest Explained
The Financial Industry Regulatory Authority (FINRA) is a not-for-profit organization authorized by Congress “to protect America’s investors by making sure the broker-dealer industry operates fairly and honestly.”
They have now officially approved Circle’s acquisition of SeedInvest, according to Circle CEO Jeremy Allaire.
Circle’s purchase of SeedInvest was originally announced in October of 2018.
Due to SeedInvest’s status as a regulated securities crowdfunding platform, Circle believes the acquisition will bring their company one step closer to their vision of “weaving crypto assets/blockchain technology and traditional forms of financial contracts such as equities and other securities.”
SeedInvest will continue to operate as they do today, though with added support from Circle. SeedInvest will join Circle’s global customer base which includes over 8.5 million people and more than 1,000 institutions.
The team behind Circle says it will continue work with regulators like FINRA and the Securities and Exchange Commission as their vision edges towards actuality.
Circle’s Vision for Security Tokens Explained
The primary motive behind Circle’s acquisition of SeedInvest lies in a vision of tokenized securities.
Blockchain’s most anticipated real-world implementation— security tokens— is conceived of by industry experts as bringing significant innovation through new methods of raising private capital.
Circle co-founders Jeremy Allaire and Sean Neville described their vision in light of the opportunities seen through security tokens:
“Broadly, we aspire to bring the economic and technical breakthroughs of crypto assets and blockchain technology to traditional forms of financial contracts such as equities and other securities. We believe that the tokenization of financial assets will ultimately unlock capital for growing companies and investment opportunities for people everywhere. Over time, more functions of private equity will be tokenized — including voting and governance, dividend payouts, and other economic features. Tokenization will also create new opportunities for businesses to build better relationships with their customers by leveraging tokens linked to ecosystem behaviors.”
Despite the early stage of security token development, the young industry has seen implementation in several domains.
Across the globe, equity, real estate, REITs, investment funds, along with other traditionally illiquid asset classes including fine art have become tokenized.
Security tokens avoid the regulatory ambiguity of ICOs by openly declaring themselves securities, and therefore abiding by existing securities laws.
With increased SEC enforcement targeting both ICOs and exchanges, many companies are leaving the ICO behind and turning to the STO as a viable alternative.
What do you think of Circle’s regulatory approval in the acquisition of SeedInvest? What will the deal eventually lead to? Let us know what you think in the comments section below.
Image courtesy of Circle.