Circle, the company that created the world’s second-largest stablecoin, is dissatisfied with the Securities and Exchange Commission.
Circle had ambitious aspirations to go public with a $9 billion initial public offering (IPO). However, the corporation alleges that those preparations were thwarted by the US financial authority.
Circle canceled its initial public offering plans in December, but did not cite market volatility as the cause. According to the Financial Times, the firm blames the SEC for failing to approve the transaction.
Circle intended to go public through a Special Purpose Acquisition Company (SPAC), but sentiment toward them has shifted due to recession fears.
A SPAC, sometimes known as a “blank check corporation,” is one that has no commercial operations. It is founded primarily to obtain funds through an initial public offering (IPO) in order to buy or combine with an existing firm.
Circle’s “S-4” registration document was deemed ineffective by the SEC. The S4 is used by companies to register with the SEC in order to obtain authority to offer new shares.
“We never expected the SEC registration process to be so quick and simple,” the company explained.
According to the FT, a significant amount of time passed between Circle’s original filing of its SPAC plans in August 2021 and the SPAC’s timeout in December 2022. According to a source acquainted with the situation, “there was an awfully long period waiting for approvals and asking questions with the SEC.”
They noted “regulatory ambiguity” surrounding the agency’s relations with cryptocurrency companies, which persisted for much of 2021.
If Circle’s deal had gone through, it would have been one of the largest involving a SPAC.
Gary Gensler, SEC Chair, has frequently urged cryptocurrency companies to approach and register with the agency. His belief that the doors are open for crypto businesses has been proven untrue, at least for Circle.
Over the last few years, the SEC has also delayed and rejected several crypto exchange-traded funds (ETFs). It has also prevented Grayscale from converting its Bitcoin Trust into a spot ETF.
Several senior US lawmakers have accused it of regulating through enforcement. Last year, Republican Senator Tom Emmer accused the SEC of conducting extrajudicial industry sweeps and expanding its power through enforcement.
The agency recently sued Gemini and Genesis for allegedly peddling unregistered securities. It is also locked in a two-year legal dispute with the fintech company Ripple, which accuses it of the same thing.