Circle Drops Poloniex Leaving US Crypto Traders High and Dry

Circle Drops Poloniex Leaving US Crypto Traders High and Dry

According to a blog post published by Circle, the cryptocurrency firm is releasing its subsidiary exchange Poloniex which is now owned by an “Asian investment group.” The trading platform will become an independent company called Polo Digital Assets, Ltd., and after November 1, 2019, U.S. residents will no longer be able to use the platform.

Also read: Ethereum Name Service Adds Infrastructure for Multi-Currency Support

Circle Spins Out Poloniex

Circle, which specializes in digital assets and over-the-counter swaps, has decided to sell the cryptocurrency exchange Poloniex. The terms of the deal are unknown, but Circle paid roughly $400 million for the trading platform in February 2018. In a message to the public, Circle cofounders Sean Neville and Jeremy Allaire disclosed that the exchange will be its own entity known as Polo Digital Assets, Ltd., and it is now backed by an investment agency located in Asia. Circle’s blog post disclosed that Poloniex will be performing “aggressive hiring” and the new entity will spend $100 million on operations management. On October 21, Polo is offering 0% trading fees until the end of the year but U.S. customers received some bad news.

Circle Drops Poloniex Leaving US Crypto Traders High and Dry
The crypto firm Circle purchased Poloniex in 2018 for $400 million and less than two years later the company announced it was spinning out Poloniex.

“This transition will mean some significant changes for existing U.S. customers of Poloniex,” Circle’s blog post underlines. “As detailed in a separate announcement from the Poloniex team, U.S. customers will no longer be able to trade on the exchange starting on November 1, 2019.” Neville and Allaire’s announcement further details:

U.S. customers will continue to be able to access and use their wallets and withdraw funds through wallet and custody services operated by Circle until at least December 15, 2019.

US Regulations Stifle Digital Currency Businesses

The cofounders mentioned that it was “bittersweet” for the company to release the firm, but also highlighted that Circle “faced challenges as a U.S. company growing a competitive international exchange.” On social media and forums, U.S. residents were flabbergasted by Circle’s announcement. One person wrote that he was “getting really sick of losing access to crypto markets due to being a U.S. citizen.” “Someone needs to put up an easy how-to guide on how to set up an offshore corporation U.S. citizens can put their assets into, and then how to use a VPN to access exchanges,” the individual continued on the Reddit forum r/cryptocurrency.

Additionally, the cryptocurrency community discussed the Asian investment group that allegedly purchased Poloniex. Celia Wan and Frank Chaparro from The Block assert “Tron founder Justin Sun is behind Poloniex’s spin-off.” The founder of Digibyte, Jared Tate, remarked that it was “sad to see Poloniex is kicking all U.S. customers off their platform.” Tate added:

One major step backward for crypto in the USA.

U.S. residents have been at a loss when it comes to cryptocurrency exchanges that offer a large assortment of digital currencies. Recently Binance shut down operations in the U.S. for a while and when it returned, the number of tradeable coins was far less. Bitfinex explained that it would “be discontinuing services to our existing U.S. individual customers” in 2017. Last summer Bittrex banned 32 cryptocurrencies from American citizens including QTUM, STORJ, and BCTP.

Since 2017, interest in cryptocurrencies has surged and many U.S. states have implemented regulations toward digital currency trading platforms and money transmitters. There are certain states in the U.S. exchanges won’t go near like New York due to the strict Bitlicense guidelines. New York’s measure of regulations and guidelines consists of a 44-page document and lots of upfront fees. When the Bitlicense was enacted into law, cryptocurrency startups like Shapeshift, Poloniex, and Xapo left the state and never returned.

What do you think about Circle parting ways with Poloniex? What do you think about U.S. residents losing more access to cryptocurrency exchanges? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, Twitter, Circle, Poloniex, and Pixabay.

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Tags in this story
BitFinex, Celia Wan, Circle, crypto assets, Cryptocurrency, Cryptocurrency Exchange, Digital Assets, Exchange, Frank Chaparro, Jeremy Allaire, justin sun, Ltd., offshore corporation, Polo Digital Assets, Poloniex, Regulations, Sean Neville, US Citizens banned, US Residents, VPN

Jamie Redman

Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for about the disruptive protocols emerging today.

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