Circle is heading to the pink-sanded shores of Bermuda, a move that might provide a much-needed boost for the cryptocurrency exchange operator.
The new outpost, which Circle announced Monday, will serve its non-U.S. Poloniex clients. Poloniex, the Boston-based exchange Circle purchased for $400 million in the height of the initial coin offering boom, has struggled to pick up market share over the past year, according to data provided by The Block's Larry Cermak. Its modest 1% marketshare is a far cry from the 58% choke hold it had over the cryptocurrency space just two years ago.
Still, Circle has been pulling out all the stops to breathe new life into "Polo." Its expansion into Bermuda is the latest chapter in that story.
The firm has secured a so-called Class F DABA license, which will allow it to offer a host of services relating to digital assets including custody and other financial services. Circle says the framework offered by Bermuda also requires Circle to comply with strict international standards, including AML procedures compliant with FATF.
Still, market insiders say this is less about Circle adhering to strict regulations and more about the firm looking for an avenue to list more tokens as it walls off U.S. clients from certain assets and regulatory pressure in the U.S. mounts. Recently, different state and federal regulators have launched investigations into exchanges such as BitMEX and Bitfinex. Bittrex, like Circle, has delisted a number of cryptocurrencies trading in the U.S.
It could also allow them to dive into new businesses or services that they would be restricted from offering in the U.S., such as higher leveraged trading and possibly a platform for initial exchange offerings.
"You might see them offer derivatives products and margin," said one cryptocurrency exchange executive, who asked to speak anonymously because he didn't want to comment publicly on his competition.
"The margin and derivative laws outside the U.S. are known to be lax," they added.
To be clear, Circle has not commented specifically on what new services it will roll out. Circle Spokesperson Jared Favole declined to provide further details.
The expansion into Bermuda follows its roll-out of fiat-to-crypto trading. Insiders say the firm is hoping recent additions to its platform will save its market share from deteriorating further, like its recent relaunch of the Trollbox trader forum. The firm also boasts its recent innovations in staking makes it the first exchange to offer daily stake rewards to holders of Cosmos ATOMs, which allows users to stake while still being able to trade their coins. The firm also recently upgraded its API.