Crypocurrency firm Circle is to acquire equity crowdfunding platform SeedInvest with the aim of creating a regulatory-approved token marketplace for capital formulation by businesses and individual entrepreneurs.
SeedInvest is currently registered with the SEC and Finra as a broker-dealer, and ranked by Inc. Magazine as the fourth fastest-growing financial services company in the United States. The company has helped hundreds of startups raise capital online and has built a network of over 200,000 investors.
Circle says the business has all the pre-requsites needed for executing regulated crowdfunding, including startup due diligence, securities issuance, investor accreditation, payments and securities custody, as well as a range of tools for startups to market their crowdfunding offerings online in a compliant fashion.
The next stage will be to gain regulatory approval for the platform to use crypto assets and tokens to raise capital as well as end-to-end services that can help startups and growth companies of all sizes to register, issue, and distribute these tokenized assets to individual and institutional investors.
The SEC has so far been playing tough with token-trading platforms, classifying the coins as securities and demanding compliance with Federal rules and regulations. Circle will be relying on SeedInvest's record for strong governance and compliance with SEC rules to push through the regulatory barriers for token-based capital formulation.
“This was a company who had been at the forefront of collaborating with government to figure out how to make it possible to innovate in the way people raise capital,” Circle CEO Jeremy Allaire told Bloomberg. “Crypto securities are going to become a major new category of securities that ultimately every business is going to adopt, just like every business has a website.”