Circle, the firm behind the world’s second-largest stablecoin, is not pleased with the U.S. Securities and Exchange Commission.
Circle had grand plans to go public with an initial public offering (IPO) worth an estimated $9 billion. However, the company claims that the U.S. financial regulator scuppered those plans.
Circle ditched its public offering plans in December but didn’t cite turbulent market conditions as the reason. According to the Financial Times, the firm blames the SEC for failing to sign off on the deal.
Circle planned to use a Special Purpose Acquisition Company (SPAC) to go public, however, sentiment towards them has changed due to recession concerns.
A SPAC or “blank check company” is one without commercial operations. It is formed specifically to raise capital through an IPO to acquire or merge with an existing company.
A 15-Month Wait For Circle
The SEC did not consider Circle’s “S-4” registration document effective. Companies use the S4 to register with the SEC in seeking permission to offer new shares.
“We never expected the SEC registration process to be quick and easy,” the company said.
According to the FT, a lot of time was lost between Circle’s initial filing of its SPAC intentions in August 2021 and December 2022, when the SPAC timed out. A person familiar with the matter said:
“There was an awfully long time waiting for approvals, and asking questions with the SEC.”
They cited “regulatory confusion” around the agency’s interactions with crypto companies that prevailed for much of 2021.
Circle’s deal would have been one of the largest involving a SPAC if it had been successful.
SEC Hindering Crypto Industry
SEC Chair Gary Gensler has repeatedly urged crypto companies to approach and register with the agency. His notion that the doors are open for crypto firms has been proven false, for Circle at least.
The SEC has also procrastinated and rejected several crypto exchange-traded funds (ETFs) over the past couple of years. It has also blocked Grayscale’s attempt to convert its Bitcoin Trust into a spot ETF.
Several high-ranking U.S. politicians have accused it of regulating by enforcement. Last year, Republican Senator Tom Emmer accused the SEC of conducting extrajudicial industry sweeps and using enforcement to widen its jurisdiction.
In a recent move this month, the agency sued Gemini and Genesis for allegedly selling unregistered securities. It is also embroiled in a two-year-long battle with fintech Ripple accusing it of the same thing.
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