Circle’s sometimes head-scratching deals take shape as a massive, long-term cryptocurrency bet

Old peer-to-peer payment company is diving in cryptomarket. Its bet is a broker-dealer able to work in midst of dozens of thousands of crypto assets. It can mean an important step to organize this market better.

There is a method behind Circle’s seemingly random deal-spree. What started as a peer-to-peer payment company five years ago has fully embraced cryptocurrency. Circle is buying up exchanges and startups in a bet that, despite this year’s slump in prices, the crypto economy is here to stay.

Its latest move was acquiring equity-fundraising start-up SeedInvest last week. That company until now had nothing to do with cryptocurrency and didn’t seem like an obvious fit for Circle. But Circle founder and CEO Jeremy Allaire explained that it’s a cornerstone for his bet that most of the existing financial system is going digital.

“If we zoom out, there’s going to be this tokenization of everything,” Allaire told CNBC in an interview at the Security Token Academy conference in Manhattan. “Eventually these marketplaces will have tens of thousands, if not hundreds of thousands of assets so the next piece was a broker-dealer,” licensed and ready to go.

Allaire’s crypto bet has tricky timing. The SeedInvest deal comes just months after Circle bought a crypto exchange called Poloniex and introduced its own dollar-backed stable coin. Yet despite the investing public’s enthusiasm for digital currencies initial coin offerings last year raised the total cryptocurrency market cap to more than $816 billion the value of these volatile digital tokens has been cut in half this year, according to data from CoinMarketCap.com.

SeedInvest’s crowdfunding strategy, as the CEO described it, is a “cousin” to how cryptocurrencies raise money through ICOs. The New York-based company connects fellow start-ups with investors online. Its broker-dealer license was a key reason for the deal, which still needs to be approved by U.S. regulators.
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