By Richard Hines
Cryptocurrency firm Circle, blames the U.S. Securities and Exchange Commission (SEC) for the failure of its $9 billion SPAC deal.
The SEC cites regulatory compliance issues regarding Circle’s stablecoin, USDC.
Deal Falls Through
The deal, which was announced in 2021, would have seen Circle merge with a Special Purpose Acquisition Company (SPAC) in order to go public.
However, the deal fell through after the SEC raised Circle’s compliance issues and failed to sign off on the deal.
In an interview with the Financial Times, Circle CEO Jeremy Allaire stated that the SEC failing to sign off on this deal was rather unjustified.
He further stated that the SEC actions were a deterrent to the growth and innovation of the crypto space, and this was a major drawback.
The SEC’s concerns highlighted Circle’s stablecoin, USDC, which is pegged to the US dollar.
The regulator raised questions about Circle complying to slated security laws with regards to the stablecoin, USDC.
Circle had hoped that the merger with SPAC would allow it the necessary funds to grow and expand the reach of this stablecoin.
This is not the first time the SEC has pulled a concern about stablecoins and their compliance to regulatory security laws.
In 2019, the regulatory body issued a warning to issuers of stablecoins, stating that they may be considered securities and therefore subject to securities laws.
Effect on the Crypto Industry
Circle’s failed SPAC deal has been a major drawback for the crypto industry which has longed to see a crypto firm go public through a merger like this one.
Many experts had seen Circle as the front-runner for such a deal, given its strong track record and solid financials.
In the light of all these, Circle’s CEO Jeremy Allaire remains bullish about what’s next for crypto and believes his firm will continue to beat all odds, succeed and continue to grow.
He however stated that the firm will continue to work with regulators to provide clear regulations for the industry, to ensure the growth of this sector.
The failure of Circle’s SPAC deal stresses the fact that the cryptocurrency industry has a long way to go in terms of regulatory clarity and acceptance.
The SEC’s concerns about Circle’s compliance with securities laws stresses the need for clear guidelines for stablecoin issuers and the broader crypto industry.