It was announced with great fanfare that Goldman Sachs backed payment app Circle has purchased long time crypto exchange Poloniex for approximately $400 million.

Circle has been in the cryptosphere for over 5 years, helping people buy and sell bitcoin alongside fiat currencies.

Reuters news agency briefly describes Circle as:

One of the best-funded blockchain startups, its investors include Goldman Sachs Group Inc and Baidu Inc.

while

Poloniex is well-known among cryptocurrency investors because it offers trading on a wide range of digital coins, several of which have been issued through online fundraisers known as “initial coin offerings” (ICOs).

Proponents see an assortment of positive aspects about Circle's acquisition, chief among them is it lends further legitimacy to the future of cryptocurrencies across the board. Furthermore, the deal may be another indicator that the market is gaining credibility with mainstream financial investors.

Other positives relate to bolstering the integrity of Poloniex itself which, over the past year, has struggled at times to keep up with demand and the ability to provide timely customer support. Overall, many see that the move will provide increased safety, credibility, stability and scalability.

Check out @crypt0's recent vlog here or @ivanli 's here for recent posts about the news and for additional details on the Poloniex deal.

As Circle's catchy slogan suggests, their aim is to take the mystery out cryptocurrencies, perhaps making cryptocurrency more accessible to new investors. Yet, could the meaning of the phrase be understood in a more literal way?

The Reuters article states that a previous 'investigation' by the news organization revealed,

...that Poloniex had allowed some customers to trade cryptocurrencies and withdraw up to $2,000 worth of digital coins a day by providing only a name, an email address and a country.

Most in the cryptoverse would agree with this statement and think nothing of it but to outsiders looking in this is perhaps far from comforting.

“I’m not sure that 100 percent of prior clients have gone through all their identity verification requests. I know they have a huge backlog of clients in their KYC queues,”

“But obviously now that we operate the company we’re going to ensure that the business is compliant in every way it needs to be.”

-Circle co-founder and CEO Jeremy Allaire

reuters

It would seem that ensuring 'compliance' is a reference to abiding by federal securities laws and SEC regulations as some of the ICO coins listed on Poloniex might be considered securities in the US.

“Clearly, people can get around things like IP (internet protocol) restrictions, and other restrictions, and people do it all the time. People evade geo-blocking mechanisms, and it’s difficult to fully police. So it’s possible that some people have snuck through that, and that’s obviously something we take very seriously”

Just as other major crypto exchanges Bittrex and Binance have demanded 'advanced verification' from new and older users in recent months, expect Poloniex to enforce stricter requirements on their users as well. Some see this as a necessary move towards greater transparency and to help rid the space of scam artists and theft. But others see these changes as part of an increasing infringement on privacy and a push towards identifying individuals and their personal assets.

Another piece of information couched in the Reuters piece was:

Circle said that in the coming years, it expected to grow the Poloniex exchange out to include other non-crypto assets, such as physical goods and financial products such as derivatives.

Derivatives. These are the financial tools that almost wrecked the world economy in 2008 and is essentially legalized gambling.

“An unregulated derivatives market essentially gives Wall Street a way to place hidden taxes on everything in the world.”

-Matt Taibbi

It's difficult to know exactly what is meant by 'growing the Poloniex exchange' and 'adding products such as derivatives'.

I don't know about you but I sure as hell don't want Vampire Squid derivatives.

Bank of America's Crypto Patents

This week's headlines belong to Circle and Goldman Sachs but rest assured other major Wall Street players will be entering the fray in due course.

In late 2017, Coindesk reported that the second largest bank in the United States, Bank of America, was awarded a patent on an automated exchange system.

a potential cryptocurrency exchange that would convert one digital currency into another. Further, this system would be automated, establishing the exchange rate between the two currencies based on external data feeds.

Surprisingly, this is not Bank of America's first patent in relation to cryptocurrencies. In 2014, BoA filed a patent to establish a "cryptocurrency-powered wire transfer system". Coindesk explains;

That system would allow users to transfer funds by converting the sender's local currency into a cryptocurrency, sending it to a foreign exchange, and then converting it to the destination country's currency.

coindesk

Hold on. What?

This process seems redundant and an obvious attempt to inject banking institutions back into their current middleman role in international money transfers. One of the main tenets of cryptocurrencies is to eliminate the need for a middleman and allow for people in communities and around the world to safely send and receive funds using a P2P network.

Called It

In an article I posted 2 months ago, Bitcoin and Bilderberg, I predicted that the banking industry would naturally attempt to control the crypto space by controlling the exchanges.

It makes a lot of sense because these are the natural bottle necks or centralized choke points in the ecosystem.

This is exactly what we’re seeing with the purchase of Poloniex. If Wall Street gains control all of the major exchanges, then it will become next to impossible to avoid doing business with these centralized banking institutions.

It’s not hard to imagine that additional fees will slowly creep into the system. Opening an account with Circle, transactions fees, or withdrawal fees may be tacked on to anyone trying to exchange crypto to fiat and vice versa.

As was illustrated by the Coindesk article, Bank of America seems poised to enter the cryptocurrency market and more banksters are sure to follow.

Let’s not forget that these very same financial institutions are the ones that caused the stock market to crash in 2008 and almost tanked the entire US economy by running the economy like a casino. In the end, it was the taxpayers who bailed out the banks.

The attempts to infiltrate the cryptosphere by the banking elite is fully underway. So expect more announcements in the near future involving the acquisition of major exchanges by Wall Street backed startups.

Hey, what’s the big idea? We should be celebrating!

Some in the cryptoverse are poised to make some fantastic gains and I’m not here to rain on anyone's parade. However, the entire POINT of Satoshi’s innovation was to find a way to free us from the centralized system where Vampire Squids who are, to quote Taibbi once more, "relentlessly jamming their blood funnels into anything that smells like money."

Now more than ever, the importance of having DEX (decentralized exchanges) is important if we don’t want to see the slow process of centralization take hold and spread across the entire market.

In contrast, there was another announcement recently that EOS and Bitfinex will be joining forces to create a decentralized exchange.

https://steemit.com/eosio/@matthewwarn/eosfinex

“We are excited to leverage EOS.io to further advance the field of high performance and trustless on-chain exchange. Block.one continues to display an unwavering dedication to improving blockchain scalability through the EOS.IO platform and it is our hope that this collaboration will allow significant advancement for all decentralised exchange” commented J.L. van der Velde, Bitfinex CEO.

This adds to the existing fully DEXed sites:

Open Ledger

CryptoBridge DEX

Semi-Decentralized:

Tetra

Other good options for maintaining your privacy/anonymity are:

Blocktrades
Shape Shift
Changelly