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Circle Achieve $24 Billion OTC Crypto Trading Volume in 2018

Boston based peer to peer payments technology company Circle facilitated $24 billion in over the counter (OTC) crypto trading volume in 2018.

The company published details of their 2018 trading activity via a blog post yesterday.  Co-founders Sean Neville and Jeremy Allaire penned the post, taking the opportunity to take stock of how the company performed in 2018.

In terms of Circle Trade – which encompasses OTC crypto trading, the founders clarified that this part of the business expanded despite a very challenging cryptocurrency market in 2018.

From the blog post:

“We onboarded a record number of new institutional clients, grew our trading operations to 24/7 with coverage in the US, Europe and Asia, and added significant workflow improvements, including the launch of our RFQ Electronic API.”

Circle Trade executed more than 10,000 OTC trades in accounting for that volume of $24 billion.  This involved almost 600 counterparties across 36 distinct crypto-assets.  The duo added:

“Circle Trade has become a core liquidity provider to the entire crypto ecosystem – including miners, exchanges, project developers, and founders – and to the new crypto asset investor base of VC’s crypto funds, hedge funds, and family offices all around the world.”

This revelation validates a report released by research company, Diar last month – when it suggested that institutional traders are moving away from cryptocurrency exchanges and conducting their business through OTC trading desks.

It would appear that Coinbase has cottoned on to the opportunities arising in the OTC market.  Although it has been a bit behind the curve, in late November the company launched its OTC trading service.  At the time of the launch, Christine Sandler – head of sales at Coinbase – stated:

“We launched our OTC business as a complement to our exchange business because we found a lot of institutions were using OTC as an on-ramp for crypto trading.”

That realization seems to have been validated by Circle’s disclosure with regard to the extent of their OTC trading.

Circle Trade provide pricing data to the MVIS Bitcoin US OTC Spot Index – the first Bitcoin index that tracks pricing specifically related to OTC trading.  MVIS maintain the index and are a wholly owned subsidiary of ETF and mutual fund manager, VanEck.  MVIS themselves started to offer OTC trading facilities in November.

Another item covered in Circle’s review of 2018 included the acquisition of Poloniex.  Circle acquired Poloniex in February of last year.  Whilst a significant exchange in the early years of cryptocurrency trading, the company had experienced serious customer service difficulties immediately prior to the acquisition.

The co-founders addressed this issue and clarified that support operations and engineering were expanded and customer tickets were reduced from a level of 200,000 at the beginning of the year to 1,000 at year end.  Customer onboarding and identity verification processes were improved upon also.

Additionally, a specific policy – the Circle Asset Framework – was implemented for the identification of cryto assets to be added to the exchange.  Over the course of the year, Poloniex added a number of cryptocurrencies including EOS, Quantum, Basic Attention Token, Status, Kyber, LOOM, FOAM, MANA, Bancor and USDC.

Poloniex also adjusted it’s focus during 2018, pivoting towards institutional investors.

Circle see a future in the tokenization of assets.  With that rationale, it acquired SeedInvest last year.  Seedinvest is a broker/dealer and operator of the largest equity crowdfunding platform in the United States.  The co-founders articulated that the acquisition was strategic, with an eye towards the future securitization of traditional assets through tokenization.

It would seem that the company are positioning themselves to cater for institutional investment business.  It has partnerships with 1,000 institutional clients including asset managers, OTC desks, exchanges, token projects, family offices, high net worth individuals, and endowments in the Americas, Asia, the Middle East and Europe.