Today, Circle, a US-based finance firm, has revealed that it is “spinning out” crypto trading platform Poloniex into its own independent company, in “an effort to create a competitive internationally-focused cryptocurrency exchange.”
Circle first acquired the crypto exchange back in February 2018, around peak interest in the crypto market. Does the company switching gears signal that interest has left the crypto market? Or are there additional implications for the US-based company around the regulation potentially coming to the space?
Poloniex to ‘Spin-Out’ Into Own Independent International Crypto Brand
Back in February 2018, before the bear market and dreaded crypto winter got fully underway, Goldman Sachs-backed finance firm Circle, acquired cryptocurrency exchange Poloniex for $400 million. Even major finance brands were FOMOing into the emerging market.
Circle failed to elevate the status of the crypto platform, and it fell far behind Coinbase, Binance, and other industry leaders, prompting Circle to “spin out” the crypto platform into its own independent firm, called Polo Digital Assets, Ltd.
1/5: We are spinning Poloniex out from Circle into a new company with backing by an investment group that plans to spend more than $100M developing the exchange to offer new features, services and assets to global customers.
— Poloniex Exchange (@Poloniex) October 18, 2019
Circle says that they faced “challenges as a US company growing a competitive international exchange,” but didn’t disclose what those challenges may be, however, the exchange taking a stance similar to Binance by barring US-based investors could be evidence of something more going on behind the scenes.
Backed by an “Asian investment group,” the new Poloniex will close trading to US crypto investors as of November 1st, potentially signaling that pressure from financial regulators in the United States may have prompted Circle to dump Poloniex.
The United States has recently taken an opposing stance against Bitcoin and cryptocurrencies, and it’s a shockwave that’s been felt across the industry.
Poloniex says the investment group plans to spend more than $100 million to “develop and expand” the platform – and says that the “cryptocurrency revolution has just begun,” and that they are in it for the “long haul.”
Circle Doubling Down on USDC Stablecoin, Sets Sights on Tether
As for Circle, a lack of interest in the crypto market compared to when the firm first picked up Poloniex may be to blame for the exchange’s spin-out.
So Circle bought #Poloniex at the top and is now selling at the bottom.
Welcome to crypto, hope you enjoyed your stay
— Birch (@BitcoinBirch) October 18, 2019
But Circle isn’t exiting the crypto space entirely. The firm plans to “double down” and shift its focus entirely on building a “more open, global and accessible financial system,” through its USDC stablecoin.
Related Reading | New “Trustworthy” Stablecoin Could Be the Tether Killer
Recently, the arms race to become the top stablecoin has heated up after the announcement of Facebook’s Libra. USDC is growing in market share, making it the 24th largest crypto asset by market cap, valued at just under half a billion. However, Tether is currently the dominant stablecoin, and its $4 billion market cap demonstrates why companies would seek a piece of the young market.
The post Buy High and Sell Low? Circle Dumps Poloniex As Crypto Market Interest Wanes appeared first on NewsBTC.