On the back of last week's announcement, we took the opportunity to run a few questions past Jeremy and Sean, respectively the CEO and President of Circle, in relation to the Poloniex acquisition. We didn't get all the answers we were after, but we got some more colour at least. Enjoy!
Note: the Q&A dates prior to this week's SEC statement on exchanges.
TE: Can you touch on the acquisition rationale, how does it fit in with Circle's vision?
JA/SN: Circle is built upon a foundation of blockchain technology and crypto assets, and we’re on a mission to make it possible for everyone, everywhere to create and share value. Circle Pay helps people around the globe connect to one another and share value just as they would share any other kind of content on the open borderless internet; Circle Trade serves institutions and investors as one of the world’s largest providers of crypto asset liquidity; and our forthcoming Circle Invest app enables individuals to tap into crypto asset investment through a simple, seamless, mobile experience. Now Poloniex addresses another key element of Circle’s product foundation: An open global token marketplace.
TE: What made you pick Poloniex?
JA/SN: Over the last year and a half, Poloniex experienced rapid growth in its retail cryptocurrency exchange. Poloniex was looking for a strategic partner with the experience and operational expertise to further scale their platform globally. Given Circle’s global reach and experience, we were best positioned to help take Poloniex to the next level in their business – we have the capabilities to take on their growth and continue to invest in product innovation.
TE: What changes should user expect to see in Poloniex from a product perspective? How will its positioning change vs other exchanges, in particular what's going to happen to all the listed tokens that are likely to be securities? Are mass delistings on the road map?
JA/SN: Circle looks forward to scaling and improving Poloniex in the days and years to come. Circle will first address Poloniex customer support, risk, compliance, and technical operations to further scale the existing product and platform. Many of the near-term changes will be behind the scenes, improving rather than dramatically altering what already works so well.
TE: Interesting timing, the SEC hinted recently that crypto exchanges listing unregistered securities could be breaking the law. How do you think crypto exchanges should be regulated?
JA/SN: Circle intends to continue playing a leadership role as it relates to national and global regulatory frameworks for this space. We fully support the SEC’s mission of protecting investors and maintaining fair, orderly, and efficient markets and facilitating capital markets, and we expect them to pursue that mission to the fullest extent. We believe the technology developed by firms like Circle is complementary to this mission, and look forward to working closely with all our regulatory stakeholders, both domestic and abroad.
TE: It's no secret that many crypto exchanges, including Poloniex, have been operating without licenses for trading securities or money transmitter registration. Was that not a big worry as you considered the acquisition?
JA/SN: Circle is one of the most broadly-licensed crypto companies. Circle maintains US state Money transmitter licenses, was the first company to obtain the NY state BitLicense, and holds an E-Money license from the FCA for operations in Europe. We intend to continue working closely with regulators locally and globally to protect customers.
TE: There are rumours that Circle obtained a “no enforcement action against prior activity” letter before completing the deal. Is there any official statement from you or the SEC itself that can be disclosed at this stage?
JA/SN: We don’t comment on rumours.
TE: If that’s the case, what should other exchanges read into this precedent: isn't the SEC effectively giving certain actors a “get out of jail free” ticket?
JA/SN: Same as above, we don’t comment on rumours.
TE: We have to ask about Tether, since Poloniex has a market there. Shall we assume you have done your diligence and it's all looking good there? Are you planning to phase USDT out for proper fiat on ramps?
JA/SN: We look forward to scaling Poloniex up and out through market expansion and localization, increasing token listings where possible and appropriate, and exploring the fiat USD, EUR, and GBP connectivity that Circle already brings to its compliant Pay, Trade, and Invest products. Any product decisions we make going forward will be thoughtful and rooted in customer feedback.
TE: A closing thought on decentralized exchanges, how worried or excited are you?
JA/SN: We believe in a more evenly distributed future, and are excited to see work in this area.
TE: Thanks guys!