Circle, a cryptocurrency payment and financial services company, announced it will acquire cryptocurrency exchange Poloniex. Poloniex is one of the largest cryptocurrency trading platform, competing with other big exchanges such as Binance. With this acquisition, Circle imposed itself as one of the leaders in the industry.
Jeremy Allaire, Circle’s CEO, is a calm manager that is well aware of the volatility of cryptocurrencies. He mentioned, “In this market you have to assume regular 20% swings.”
Circle Trade, one of the largest liquidity providers of digital assets and cryptocurrencies in the world, is a business Jeremy Allaire and his team operate. They continuously make markets on nearly all major exchanges globally, and provide significant scale in over the counter (OTC) trading with large institutional buyers and sellers of crypto assets. It works as the middleman between buyers and sellers, when movement in the prices make them want to sell or buy. They make money with the volatility of the market.
Dan, chief officer of Circle in Boston mentioned,
“When things start to get really out of whack really fast, that tends to be good for us,”
Every month, there is $2 billion worth of transaction in cryptocurrencies on the platform. It is also only for large cryptocurrency investors since the minimum deal size is 250 000$.
Dan Morehead, founder and CEO of Pantera Capital, a fund that specializes in cryptocurrencies, said his firm trades on all the major online exchanges, but will turn to a trading outlet, like Circle’s, when the desk posts prices “at a discount to the market…That’s when we’re interested in using them.”
Circle Trade is only a part of what Circle is planning to do. They will launch their Circle Invest app soon to bring more small investments in cryptocurrencies. They also have a Centre Protocol, an open-source platform that could replace digital wallets that certain companies use such as Paypal. Many projects are upcoming soon such as the announcement on Monday that Circle is acquiring Poloniex. According to Fortune, the acquisition was a transaction of $400 million.
Circle will then become a major threat to other cryptocurrency exchange platforms such as Coinbase. With this transaction, Circle’s revenue for the last three months is more than $250 million, which will make it a billion dollar company in a year’s time.
Circle will then gain a lot of Poloniex’s users which will expand their clientele. They have mainstream investors, highly qualified developers and a lot of customers. Their ultimate goal is to create the next bank model regarding cryptocurrencies and finance.
Jim Breyer, Baidu’s Founder, compared Allaire to Mark Zuckerberg in terms of strategic thinking: Just as the Facebook founder “instinctively understood” the need for an overarching, sticky social platform, not just a network for colleges, Allaire has designs on an entirely new financial operating system, not just another bank. Circle’s CEO said, ” Our vision was always how to fuse the existing financial system with cryptocurrency as a hybrid, digital model.”
Circle’s chief officer, said that the cryptocurrency market will be less volatile in the and their will bigger investments,
“This thing went hockey stick in the last eight months but, like, it’s been around for four years,” says Dan of Circle Trade. While cryptocurrency prices have been spectacularly mercurial over the past few months, a boon for the business, he says he’s not worried about the market settling down. “As this thing becomes a 10x bigger asset class and has volatility on par with gold, we’ll be dealing with larger tickets and smaller movements. That’s how this thing scales.”
Circle, on a long term period, aims to connect the all of the world’s digital wallets. On a short term period, Circle Pay is more popular in Europe and it plans to hire 100 employees for their division in Asia. The Asian market would be a great opportunity for Poloniex to gain more users since it already fits in with Chinese regulations.
The acquisition of Poloniex, makes Circle a company to watch in cryptocurrency since it is diversifying its assets. It will be one of the most influential companies in the industry, which could cause trouble to other exchanges such as Coinbase and Binance.