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US virtual currency trading platform Circle plans big expansion in Asia

The platform, backed by IDG Capital, Goldman Sachs and Baidu, will focus on helping Asia institutions trade digital tokens

PUBLISHED : Friday, 16 March, 2018, 9:01am
UPDATED : Friday, 16 March, 2018, 9:00am

US cryptocurrency trading platform Circle, backed by IDG Capital Partners, Goldman Sachs and internet giant Baidu, is expanding to Asia, launching over-the-counter digital currency trading services to institutional investors such as hedge funds and fund managers.

Founder and chief executive Jeremy Allaire said the company is expanding its Hong Kong office staff this year to up to 35 from a handful currently, and is looking to support its Asia market-making, sales, customer service and regulatory compliance functions from the city.

“We want to have hundreds and thousands of major clients in Asia,” he said. “My vision is that there can be crypto tokens for everything, I’d like to have a market place where people from all over the world [can trade tokenised] financial assets,” said Allaire.

Circle, which was founded in 2013 and has 400 employees globally, is already profitable and Allaire said it is currently trading over US$4 billion in cryptocurrencies a month for its clients. It is backed by US$140 million in venture capital, and other investors include Chinese fintech company CreditEase, the investment arm of financial services firm China Everbright and US venture capital firm Accel Partners.

As a next step, Allaire said Circle would introduce in Asia cryptocurrency trading for individual investors, as well as a peer-to-peer money transfer service backed by the bitcoin blockchain network. He did not give a timeframe.

Circle’s expansion comes as cryptocurrency exchanges globally face increasing scrutiny by regulators amid cases of hacking and thefts of clients’ digital assets, as well as concerns over financial instability.

This month, Japan’s market regulator suspended two exchanges, citing their failure to put in place proper controls and cybersecurity measures. In the US, the Securities and Exchange Commission has also issued warnings that some exchanges appear to be regulated marketplaces but in fact are not.

China to stamp out cryptocurrency trading completely with ban on foreign platforms

China has cracked down hard on virtual currencies in a series of measures, including shutting down exchanges and banning banks from providing funding to cryptocurrency ventures.

Allaire said there were trading platforms and exchanges with weak controls and vetting of new digital tokens, allowing any tokens to be listed on their platforms.

“[People refer to them as] ‘Coins’R’Us’, platforms that list anything that comes out. That might not only be violating securities laws … but also doing a disservice to investors by launching really weak projects. That is not a reputation we want to have,” he said.

He said Circle would soon publish a set of guidelines that clarify its criteria on digital tokens and blockchain projects on its platform.

In February, Circle acquired a cryptocurrency exchange called Poloniex in a deal that IDG Capital Partners helped finance.

Douglas Jiang, director of growth capital at IDG Capital, said the investment in Circle underscored IDG Capital’s bet that blockchain had the potential to disrupt traditional financial transactions.

“We want to invest into [disruptive technology] that has the potential to go beyond BAT in China,” said Jiang, referring to the three Chinese internet giants Baidu, Alibaba and Tencent. He said IDG Capital Partners has been investing in blockchain-related projects since 2012.

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