The Securities and Exchange Commission (SEC) has expressed multiple concerns regarding stablecoin issuer Circle’s initial public offering (IPO). According to Barron’s, the SEC has specifically raised issues related to the disclosure of concerning its stablecoin USDC. The documents obtained through a public records request highlighted what the SEC perceives as inadequate disclosures from Circle.
Circle had initially attempted to go public in 2021 through a special purpose acquisition companySPAC) merger, but this plan fell through. Subsequently, discussions about pursuing traditional IPO began earlier this year. A spokesperson from Circle emphasized that becoming a publicly traded company in the U.S. has long been part of their strategic vision.
USDC currently holds the position of being the second largest stablecoin globally with an impressive market capitalization of $32.7 billion; however, it is noted that Circle has not disclosed its intended valuation for the IPO despite earlier suggesting a valuation of $9 billion during its SPAC merger attempt.
A meticulous review by Barron’s revealed 155 pages of documents pertaining to communication between Circle and the SEC when they aimed at going via a SPAC. This review indicated an extensive exchange between both parties lasting nearly one, which is longer than usual in such situations. Notably, it was observed that there were requests from the SEC for additional disclosures concerning potential risks associated with classifying their token a security and Circle complied with these requests.
The possibility that USDC could be classified as a security by the SEC poses uncertainty around Circle’s IPO plans due to potential penalties and increased regulatory restrictions on their operations.
Furthermore, beyond just USDC being considered as security—Circle itself faces questions regarding whether it should be categorized as an “investment company,” potentially subjecting them to more stringent regulatory and limitations on business activities than traditional operating companies face.
To address these concerns over regulation ambiguity within cryptocurrencies’ status classification—companies like Tether and Circle have actively pushed for clear legislative definitions on how stablecoins should be regulated.
Circle recently reinforced its commitment towards U.S.-based operations by relocating its legal headquarters from Ireland last month after filing plans for an IPO with the SEC in January.