Industry

Circle Attracted 30% More Institutional Investors in May Despite Crypto Price Woes

Thomas Delahunty | June 25, 2018 | 10:30 pm
Circle
Industry

Circle Attracted 30% More Institutional Investors in May Despite Crypto Price Woes

Thomas Delahunty | June 25, 2018 | 10:30 pm

Digital payment app Circle saw a 30% increase in institutional investors joining its ‘Circle Trade’ platform in May of this year. In attempts to meet this demand, the startup is attempting to mature its product by applying more automation to the platform, which will help cater to high-frequency trades and bigger block orders.

Circle Continues to Garner Mainstream Interest

It’s not been a great month for crypto price-wise, but that doesn’t mean that investors are shying away from getting involved with the space. Goldman Sachs-backed Circle saw a massive uptick in hedge funds and other mainstream investors joining its digital currency trading platform last month.

“Major institutional investors don’t go through a telephone broker. They go through an electronic interface,” Jeremy Allaire, Circle’s CEO, said. “We’re maturing this into a more traditional product.”

To deal with this uptick in investors that require high-frequency and block orders, the Circle Trade platform is becoming more digitized and automated, the company said today, according to CNBC.

“In May, which was a challenging month, we saw a sharp increase of unique new counter-parties,” Allaire, said in an interview. “A lot of folks on the institutional side are on-boarding, and getting their ducks in the row.”

As per the interview, month over month, Circle has seen a 30% increase in new institutional clients and was doing 15 times more transaction volume per day from a year ago — this despite the fact that the price of Bitcoin fell about 20% in May.

The reasons behind these changes came after feedback was received from Circle’s new clients, which include family offices and venture capital firms. They said that Circle Trade, in its current form, wasn’t equipped to handle the $100,000 or $1 million high-frequency equity trades clients were used to.

Until now, Circle employees at offices in the U.S., London, and Hong Kong would manually quote a price over an instant messaging platform like Skype, then authorize those trades. Circle, which facilitates about $2 billion in trades every month, announced Monday that the orders and settlements will now be available through an automated process.

“Major institutional investors don’t go through a telephone broker. They go through an electronic interface,” Allaire said. “We’re maturing this into a more traditional product; it’s much faster and a more flexible way to trade.”

Talks With US Regulators

As reported earlier this month, Circle has plans to obtain a federal banking license in the U.S. to help it provide more services to customers. The company is also attempting to help investors buy and sell tokens deemed to be securities, and to do so is pursing registration as a brokerage and trading venue with the Securities and Exchange Commission (SEC).

These are bold moves. As of yet no crypto-related organization has obtained said status with U.S. regulators. According to Allaire, the move to work with federal authorities (as opposed to at the state-level) will help shrink the number of regulators Circle must appease. This is because federal laws trump the patchwork of varying state laws related to cryptocurrency operations.

Allaire has been a vocal supporter of cryptocurrencies, saying earlier this month that all major world currencies, like the dollar, yen, and euro, will one day have their own digital versions:

“Our view is that all fiat currency will be crypto… It seems inevitable at this point.”

Featured image from Shutterstock.
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