Deal of the Month February 2018: Circle’s $400m cryptocurrency exchange deal

Pictured: Marieke Flament, MD for Europe, Circle

Circle, the Dublin-headquartered fintech firm makes a bold move in cryptocurrency.

Circle, the Dublin-headquartered finch firm, made an audacious move, acquiring the Boston-based cryptocurrency exchange Poloniex in February, for a sum rumoured to be in the region of $400 million (€327 million).

Blockchain payments

Circle started out life as a bitcoin start-up which shifted its focus to offering a peer-to-peer payments app. The payments offering is simple and free for consumers to use, even for cross-border payments, thanks to blockchain technologies. The platform handled over $1 billion in transactions in 2016.

Speaking to Business & Finance last year, Marieke Flament, Managing Director Europe of Circle, explained the vision of how blockchain will change the way we use money, and how we may communicate digitally to transfer and exchange money:

“We believe blockchain is very important because if you think about it, today there is no protocol of money. There is a protocol for the internet, http, and there is a protocol for email, it’s smtp, but that is not there yet for money. Money is data.”

The idea is to create the equivalent of an smtp of money 

Elucidating on their plans, she continued, “We are creating a blockchain protocol which is codenamed Spark – the idea is to create the equivalent of an smtp of money, to enable different wallets to be able to talk to each other. So on one hand we are very focused on the consumer product and the other hand on actually creating the ecosystem to enable us to have all of those things together.”

Cryptocurrency trading

While Circle were building their consumer reputation as a social payments app with a plan to “make money fun”, behind the scenes Circle is one of the largest crypto-trading desks in the world, with hundreds of millions passing through every month. Since setting up their Dublin office in 2014 Circle has been growing continuously, and announced plans to double their Dublin workforce last year, and moved into a new HQ. Backers including Goldman Sachs, Accel Partners and Pantera Capital have invested almost $140 million in Circle.

Poloniex may become the first SEC-regulated cryptocurrency exchange

Some in the industry believe the acquisition move may eventually lead to Poloniex becoming the first cryptocurrency exchange regulated by the US Securities and Exchange Commission (SEC). Initial coin offering (ICO) tokens, which are currently traded on Poloniex, are considered unregulated securities at this point in time.

The deal, which is one of the largest, if not the largest in the industry thus far, will give Circle customers access to buy and sell cryptocurrencies, including bitcoin (which it pivoted away from, shutting down its bitcoin exchange in December 2016).