Stellar Reportedly to Purchase Startup Chain for $500 Million
Stellar is in talks to purchase blockchain startup Chain in a deal said to be valued at $500 million USD, per Fortune. The transaction would reportedly be paid in Stellar’s Lumens (XLM), the seventh-largest cryptocurrency by market cap.
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A Potentially Significant Deal for Both Firms
Chain is an American startup working on integrating blockchain and distributed ledger technology (DLT) for the financial services industry. The deal seems to be a natural fit, as Stellar is building a payment system based on DLT. The report is the latest news about Stellar, which has demonstrated its ambitions through its activities in the past year.
Chain is said to have a strong pool of engineering talent, which made it a tempting acquisition target for Stellar, which has ample cash. A year ago, XLM was trading at around $0.04 USD, while today it is near $0.23 USD. Now, it looks like Stellar is in the process of deploying that war chest.
Chain has a wide variety of investors, from traditional financial industry players such as Visa, Citi Ventures, and Nasdaq to blockchain-focused venture capital firms like Blockchain Capital and Pantera Capital.
Chain on a Roll
The deal, if it materializes, would occur after a run of positive news coming from Chain. In November of last year, credit card behemoth VISA announced that they had partnered with Chain to develop a pilot for a blockchain-based payment system called B2B Connect. There were reports that UnionBank in the Philippines began operating the system in the third quarter of 2017, and that testing began in January.
The CEO of Chain, Adam Ludwin, has made some comments which help to shed light on how Chain sees the crypto/blockchain world. According to Yahoo! Finance, Ludwin thinks it’s better to focus on the asset that is being stored on a blockchain, instead of whether the blockchain is public (like Ethereum) or private (like VISA’s payment system). Yahoo! Finance quoted him saying:
“‘I think the dichotomy between public and private [blockchains] is a false one, and it’s actually not helpful. Instead, I would separate out whether we’re talking about a new asset—bitcoin, ether, lumens, Zcash—where you have a whole new asset class, the creation of which and the purpose of which is native to some public network,’ or existing financial assets that large public companies want to move around using blockchain.”
Stellar Also Has the Wind in Its Sails
Stellar has also been in the news lately. A week ago, New York State financial regulators approved Stellar’s XLM to trade on the itBit exchange. The decision indicated that regulators in the Empire State don’t view XLM as a security, which means it could possibly avoid registration with securities regulators. This would be good news for investors, many of whom are put off from investing in cryptocurrencies due to the regulatory uncertainty surrounding the space.
In other Stellar news, mobile messaging app Kik announced last December that it would be moving to Stellar’s network to run its Kin2 tokens on. The unique arrangement sees Kik having two tokens, Kin1 and Kin2, with Kin1 operating on Ethereum.
Further, last March, news broke that Stellar was planning to adopt the Lightning network in order to facilitate payments between it and the Bitcoin mainnet. And finally, last month Stellar’s network was chosen by IBM and startup Veridium Labs to tokenize carbon credits.
What’s your take? Is Stellar setting itself up as a serious competitor to its larger brethren?
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