Blockchain start-up Circle has completed the acquisition of SeedInvest, a US-based investment crowdfunding platform, in a bid to become a fully SEC-regulated broker-dealer. Deal terms were not revealed.
The acquisition puts the Boston-based digital-asset exchange operator on a firmer regulatory footing and positions it to offer a broader range of blockchain-based securities. It also allows the platform to perform all operations in a regulatory compliant manner.
Founded in 2012, SeedInvest facilitates the equity-crowdfunding service through its platform, which allows retail investors to browse through different businesses and buy stakes depending on their eligibility. The New York-based firm will continue to operate separately under Circle’s umbrella.
The news was reported in a blog post by the Goldman-funded startup, which stated that the takeover aims to enable firms to issue security tokens using blockchain while providing customers with greater access to invest in cryptocurrencies.
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After winning the regulatory approval, Circle is now capable of offering blockchain-based securities, under the oversight of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
A response to US regulators
Circle, which is reportedly seeking to raise $250 million in new funding, has been plowing money back into areas other than its flagship exchange Poloniex. The company has recently expanded support to its USD Coin (USDC), a stablecoin pegged to the US dollar, adding more than 100 exchanges, wallets, platforms, apps, and service providers to the ecosystem.
“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,” Circle said.
Furthermore, the move is being seen as a response to US regulators classifying certain digital tokens as securities and therefore coming under the SEC’s supervision. Wall Street’s top watchdog says that any entity that wants to become an ATS needs to register with the SEC as a broker-dealer and become a member of a self-regulating organization, such as the FINRA.