Digital payments company Circle announced that it has acquired US-based cryptocurrency exchange Poloniex for $400 million.
Cryptocurrency exchanges are where people buy and sell cryptocurrencies. These exchange usually accept fiat currencies (dollars, pounds, euros, etc.), cryptocurrencies, and other digital assets.
Circle already operates Circle Trade, which is one of the biggest “over the counter” trading desks for cryptocurrencies in the world. The company also plans on launching an app, Circle Invest, that will serve as a mobile platform for retail customers to invest in cryptocurrency markets.
Circle co-founders Sean Neville and Jeremy Allaire said in an official blog post that the acquisition of Poloniex addresses another key element of Circle’s product foundation: “An open global token marketplace.”
According to CoinMarketCap, the Poloniex exchange, available in over a hundred countries worldwide, is the 14th largest exchange of its kind. It offers trades in 68 different coins and reportedly became the first exchange to reach $1 billion in daily volume.
Circle said that its first and immediate task will be to “address customer support and scale risk, compliance, and technical operations to bolster the existing product and platform.”
“We also look forward to scaling Poloniex up and out through market expansion and localization, increasing token listings where possible and appropriate, and exploring the fiat USD, EUR, and GBP connectivity that Circle already brings to its compliant Pay, Trade, and Invest products. More on these efforts to come,” Sean Neville and Jeremy Allaire said.
Circle will commit to “maintaining the features and services that have made Poloniex so familiar and relied upon by customers around the world.”
Circle envisions growing the Poloniex platform to not only serve as an exchange for cryptocurrencies but help transform it into a larger “robust multi-sided distributed marketplace” for tokens which “represent everything of value”, including “physical goods, fundraising and equity, real estate, creative productions such as works of art, music and literature, service leases and time-based rentals, credit, futures, and more.”
Ryan Selkis, founder of open-source cryptoassets database Messari Crypto, was quoted by CNBC as saying that the acquisition is excellent news for the industry.
“This is tremendous for the broader industry’s health,” Selkis said. Adding, “Circle is a terrific company that sets high standards around consumer protection and self-regulation, and the Poloniex acquisition will make a wide range of digital assets more safely accessible to the broader public.”
Cryptocurrencies, which entered the marketplace in 2009, are types of digital money, i.e., money that exists purely electronically. A cryptocurrency has no central bank like traditional currencies such as the dollar, pound, Euro, yen, yuan, or rupee.
The most common cryptocurrency today is Bitcoin. Bitcoin is also the oldest cryptocurrency. The second-most common is Ethereum. There are over fifteen-hundred different cryptocurrencies currently in circulation.