Circle Under SEC Scrutiny: Stablecoin Investigations Continue

Table of Contents

• Circle Yield Investigated? 
• Circle Determined To Go Public
• Stablecoins Under The Microscope
• SEC Doubling Down Amidst Criticism

The stablecoin-based crypto company recently revealed that it is under investigation by the US Securities and Exchanges Commission, as it was issued a subpoena by the latter back in July. 

Circle Yield Investigated? 

The investigation was formally commenced in July, a month after Circle began offering its high-interest yield product, Circle Yield to corporate USDC holders while boasting of Bermudan licenses. According to a regulatory filing on the SEC website, the USDC issuer was subpoenaed by the SEC to hand over paperwork related to the programs, offerings, and activities. 

Circle Determined To Go Public

Team Circle disclosed the subpoena first on August 6, in a bid to go public via a special-purpose acquisition vehicle (SPAC), saying, 

"[I]n July 2021, we received an investigative subpoena from the SEC Enforcement Division requesting documents and information regarding certain of our holdings, customer programs, and operations. We are cooperating fully with that investigation.”

However, the team didn’t shed further light on the prime focus of the investigation. Despite the hindrances, the firm is moving ahead with its plans to become a federally chartered bank. 

On Monday, Circle disclosed another regulatory filing done on Monday, October 4, which reiterated the previous statement and revealed that the SEC investigation is still ongoing. The company has also stated that it agreed to pay the SEC over $10 million to settle charges of non-registration against its one-time subsidiary, Poloniex. 

Stablecoins Under The Microscope

Lawmakers and regulators globally are particularly concerned about stablecoins, since there is always a risk that these fiat-linked assets could negatively influence national currencies. US regulators, in particular, have been very vigilant on stablecoins, with the US Treasury already keeping a very close eye on the sector. For US authorities that are focusing their energies on regulating the crypto market, stablecoins is a priority.

SEC Doubling Down Amidst Criticism

The SEC itself has taken on a more active role in regulating the crypto market. The agency has initiated investigations and issued notices against multiple crypto-based firms in the last year alone. The most noteworthy is the Ripple lawsuit, which is steadily becoming one of the most protracted cases in the market. It has also drawn criticism from multiple leaders and experts in the crypto space. CEO of Ripple, Brad Garlinghouse has pointed the lack of clarity provided by the SEC, while US Senator Pat Toomey has called out the SEC’s ‘regulation-by-enforcement’ approach to this space. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.