Circle to Acquire Chicago Stock Exchange After Poloniex?
In a world where Nasdaq, Cboe Global Markets and ICE reign supreme over the stock market, there is very little room for other stock exchanges, even ones as old and as storied as the Chicago Stock Exchange. The CHX has long been looking for ways to raise its pitiful 0.5% market share. Their latest effort, an attempted merger with a Chinese consortium, was blocked by the SEC on February 15.
Faced with such bleak prospects, some are suggesting that the CHX should reinvent itself and become a full-fledged cryptocurrency exchange, with “securities tokens” being its primary focus. “Crypto-securities” are more in line with the U.S. regulatory practices than “utility tokens” favored by ICOs. This would give the CHX an edge over other crypto exchanges, since experts believe that compliance is the next stage and the only way forward for serious participants in the crypto market. On the other hand, the CHX would also get a foot in the door of this budding new market before other traditional stock exchanges.
Richard Johnson of Greenwich Associates believes that, in case the CHX does enter the crypto sphere, it will most likely happen after a proposed merger with a major crypto company – one which already knows the ropes. And this is where Circle comes in – as the most likely candidate to acquire CHX and transform it into a cryptocurrency exchange, if such a transformation were to happen. Circle is an app-based payments company from Boston. Backed by Goldman Sachs and Baidu (Chinese Google), Circle is one of the most well-funded blockchain companies (it uses a peer-to peer payments system). On February 26, Circle barged into the cryptocurrency market, guns blazing, and acquired Poloniex for a reported $400 million – the largest acquisition in the industry so far. So, you know Circle means business.
Circle’s portfolio already includes Circle Trade for crypto transactions and Circle Pay for SMS payments, with Circle Invest in the works. It also appears that Circle has plans to develop Poloniex into an exchange for more than just digital assets. First of all, Circle plans to register and cooperate with the U.S. Securities and Exchange Commission, with the aim of making Poloniex the first regulated crypto exchange. This approach may well unlock the full potential of cryptocurrencies and the blockchain technology in general. According to Sean Neville of Circle, in the future, Poloniex will become a full exchange, with tokens and coins representing all types of assets and contracts. As such, Poloniex will not challenge only crypto exchanges, but also alternative payments systems. With that in mind, a merger with the Chicago Stock Exchange certainly does sound believable – and beneficial for both parties.