Boston based digital assets firm Circle has signed an agreement to acquire SeedInvest, the equity crowdfunding platform for the sole purpose of helping startups raise capital with cryptocurrencies. Once the acquisition is finalized, private companies will be able to issue tokens and have customers trade them on the exchange. This move comes on the heels of the acquisition of Poloniex, a step that was taken to create a”robust multi-sided distributed marketplace” that would host all kinds of tokens.
With a network of over 200,000 investors and thousands of private businesses, SeedInvest has the type of network base that Circle needs— private firms that want to raise capital.
Founded in 2012, SeedInvest connects startups to investors, who browse through the companies listed and buy a piece of equity in any that suits them. The New-York based crowdfunding platform facilitates its crowdfunding service through a broker-dealer license from the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is also ranked as the fourth fastest growing financial service company in the U.S. by Inc. Magazine.
If approved by the regulators, the acquisition would see Circle help startups raise capital with crypto assets as well as end to end services that includes “including startup due diligence, securities issuance, investor accreditation, payments, and securities custody.” Perhaps the most important benefit from this deal is that it raises the bar for the crypto industry, as it puts Circle a step closer to the trading of security tokens.
In an interview with Bloomberg, Circle CEO Jeremy Allaire noted:
“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.”
Trading platforms have so far stayed away from listing tokens that might be considered as securities due to the strict rules that govern them. The SEC classifies assets from initial coin offerings as securities, which means issuers and platform that handle trading must register and comply with federal laws before issuing or trading them. Circle had revealed plans earlier this year to pursue a federal banking license and registration as a brokerage and trading venue with the SEC so investors can buy and sell security tokens.
According to the press releases, the move will expand the Circle team by 30 employees.