By
Temitope Olatunji
April 24th, 2024
Now, with SeedInvest acquisition, Circle is capable of to ofingfer blockchain-based securities, under the control of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Circle, blockchain startup backed by Goldman Sachs, has officially completed the acquisition of equity crowdfunding firm SeedInvest. The announcement comes amid realizing Circle’s fundraising plans. In the future, the company wants to tokenize securities and become a fully SEC-regulated broker-dealer.
In a blog post, Circle said:
“The acquisition is a further step toward realizing our vision of a more open, global, connected, and inclusive financial system. Broadly, we aspire to bring the economic and technical breakthroughs of crypto assets and blockchain technology to traditional forms of financial contracts such as equities and other securities.”
The deal was first announced in October last year. The acquisition of SeedInvest, a company that helps various private companies raise money through the internet, became the next step of following the Circle’s strategy. Before that, Circe acquired an entire cryptocurrency exchange Poloniex. The most probable aim of such expansion is to register with the SEC so that traders could purchase and sell tokens as securities for the first time, which would be a milestone for the entire cryptocurrency world.
Founded in 2012, SeedInvest facilitates the equity-crowdfunding service through its platform that enables retail investors to browse through different businesses and buy stakes depending on their eligibility. The company has successfully funded over 220 companies and has over 260,000 users. The total investment made via SeedInvest makes up over $115 million.
Commenting on the acquisition, Circle said:
“We welcome the talented SeedInvest team and the incredible community of SeedInvest investors and companies. SeedInvest joins Circle’s team of more than 300 people and global customer base of more than 8.5M individuals and more than 1,000 institutions.”
Circle to Win Regulatory Approval
The acquisition of SeedInvest was completed after Circle obtained regulatory approval by the Financial Industry Regulatory Authority (FINRA). Now Circle is capable of offering blockchain-based securities, under the control of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Circle stated:
“As with other areas of our business, we will work closely with leading regulators in the US such as the SEC and FINRA as we evaluate the evolution of private capital market products and services using crypto assets and blockchain technology.”
According to the company’s blog post, SeedInvest will continue to operate separately, but with additional support behind the company. Moreover, Circle promises to explore future opportunities enabled by tokenization.
Circle’s co-founders Sean Neville and Jeremy Allaire said:
“We believe that the tokenization of financial assets will ultimately unlock capital for growing companies and investment opportunities for people everywhere. Over time, more functions of private equity will be tokenized — including voting and governance, dividend payouts, and other economic features. T
okenization will also create new opportunities for businesses to build better relationships with their customers by leveraging tokens linked to ecosystem behaviors.”
Fundraising Rumors
There is speculation that Circle is seeking to raise $250 million in new funding, that’s why it has been investing money into areas apart from its exchange Poloniex. The company has recently added support to its USD Coin (USDC), a stable coin pegged to the US dollar, adding more than 100 exchanges, wallets, platforms, apps, and service providers to the ecosystem.
According to a person familiar with the matter, Circle is considering a combined round of equity and debt funding. Moreover, some believe that the company will use Security Token Offerings (STOs) to raise money.
STOs act as digital investment contracts. They are an evolution of ICOs, but with proper regulation. To find more about STOs, you may read our comprehensive guide that will help you figure out what STO is, how it works, and what’s hidden behind this industry’s disrupter.
You may also check the latest Security Token Offerings (STOs) in COinspeaker’s STO Calendar.