SEC Prevents Circle’s Plans To Go Public

January 25, 2023 2:54 pm Comments

The SEC has built a negative reputation so far within the crypto community due to its actions of regulating the industry through litigation instead of promoting clear regulation guidelines.

So far, the SEC has targeted many ICOs as part of its enforcement actions, but it looks like it is also targeting crypto companies themselves as well.

Just recently, crypto payments company Circle revealed that it was unable to go through with its plans to go public because the SEC refused to sign off on it.

By not allowing Circle to go through with its $9 billion plan, it is likely that the SEC is slowing a lot of progress and innovation in the stable coin sector.

After all, Circle is the company that created USDC which is one of the most popular stable coins and trails only behind Tether (USDT).

CoinDesk reports:

The company behind USDC, the world’s second-largest stablecoin, had announced plans to go public in July 2021, with a valuation of $4.5 billion, which doubled in February 2022 when the company negotiated a new deal with special purpose acquisition company (SPAC) Concord Acquisition Corp., reflecting improvements in its financial outlook and competitive position.

According to the FT, Circle said that neither turbulent markets nor fearful investors were a factor in the abandonment of its SPAC deal.

“The business combination could not be consummated before the expiration of the transaction agreement because the SEC had not yet declared our S-4 registration ‘effective’,” the group said.

An S-4 registration is a registration document that companies have to file with the SEC seeking permission to offer new shares, the report added.

One of the things that is definitely needed is a more streamlined process that allows crypto companies to go public.

As it is right now, the registration process with the SEC is slow and extremely complicated which discourages a lot of firms from going public.

In Circle’s specific case, it has already been 15 months since Circle had filed with the SEC and the deal has still not made any progress.

In the end, the SEC still did not give approval and reason for denial had nothing to do with the performance of the company or the investors.

The SEC has also been preventing any progress in allowing the approval of a spot Bitcoin ETF which has been another topic that has been debated. concludes:

FTX aside, the SEC has shown hesitance toward the crypto industry at large.

While several Bitcoin futures-based exchange-traded funds (ETFs) have now been approved, spot crypto ETFs—such as one proposed by Grayscale—have so far all been rejected or stalled.

And if not for rejection after rejection or alleged sluggishness to address the growing industry, the Commission has also been hard at work on the enforcement front.

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