Circle, the Boston based crypto trading firm, is well known for being one of the earliest institutions to exist in the crypto industry and one of the most profitable ones as well. Their over-the-counter (OTC) desk saw over 24 billion in volume in 2018, executing over 10,000 OTC trades. The firm is also partner to over 1000 institutional clients ranging from exchanges to asset managers.
Backed by leading investment bank Goldman Sachs, Circle has been acting as a bridge for institutional players to connect with the crypto market. Its OTC was one of the largest, with a $250,000 minimum order size. The firm had also acquired crypto exchange Poloniex and New-York based startup investing platform SeedInvest last year.
Now, it looks like Circle is shifting its focus completely towards its dollar-backed stablecoin USDC, as it is slowly transitioning out of the trading sector.
A recent announcement from Crypto exchange Kraken stated that Circle has sold its OTC desks to Kraken. In the December 17 blog post, Kraken said that it has acquired “one of the most recognized OTC desks in crypto.”
Circle co-founders Jeremy Allaire and Sean Neville confirmed the sale in their official blog saying:
“We have known and admired Jesse and his team at Kraken for many years, and we have every confidence and expectation that Circle Trade customers and partners will continue to find best-in-class OTC liquidity service and responsiveness through Kraken going forward. Circle Trade represents an enormous success for the industry as well as for Circle, and we’re excited to see Kraken grow it further.”
The announcement followed Circle’s sale of the Poloniex trading platform a year after its acquisition. The trading firm also shut down its payments platform Circle Pay in September and layed off about 10% of its workers following the current restrictive US regulatory climate followed by another 10 being laid off in December.
As per Circle’s blog, the company will now focus on its “core strength,” which is its “platform services infrastructure” according to the CFO’s. It further states that the infrastructure has supported the USDC stable coin over the years and it will supposedly support global payment, custody and stablecoin wallet APIs.
While Circle shifts away from crypto trading Kraken will now be traversing into institutional waters. The acquisition is expected to “significantly bolster” Kraken’s services as the exchange will now be exposed to Circle’s flock of institutional clients. Kraken also aims to make the entire OTC trading process more streamline from quote to settlement.
As more and more crypto businesses start serving institutional clients, it strengthens the possibility of new money flowing as the big players are still not comfortable to jump in on the rising crypto trend.