The company first reported interest from the regulator in August, but the information went unnoticed. Thus, according to the new S-4 Form, in July 2021 Circle received a summons demanding to provide “documents and information regarding certain assets, client programs and operations”.
Circle stressed that they are “fully cooperating” with the SEC as part of the investigation. The documents do not specify its scale and details.
Plans to enter the stock market
Earlier, Circle closed a $440 million funding round. FTX, Digital Currency Group, Fidelity Management, Valor Capital Group and other venture capital firms provided investments.
In July, it became known about Circle’s plans to enter the stock market through a merger with special-purpose acquisition company (SPAC) Concord Acquisition Corp.
At the same time, the company disclosed information about the provision of the USDC stablecoin. The issuer of which is the Centre consortium, managed by Circle together with the Coinbase Bitcoin exchange. US dollars backed most of the “stable coins”, the rest are bonds and other highly liquid assets. Later, the USDC reserves promised to be converted into dollars and treasury bills.
Commercial cryptocurrency bank with full redundancy
In August, the company’s CEO, Jeremy Allaire, said that Circle would become a “commercial cryptocurrency bank with full redundancy”. Its activities will comply with the requirements of the Federal Reserve, the US Treasury, the OCC and the FDIC.
Recall that in the summer, US Treasury Secretary Janet Yellen called for accelerating the development of a regulatory framework for stablecoins.
Moreover, SEC Chairman Gary Gensler called stablecoins “poker chips in casinos in the Wild West,” and the US Senate announced the need for full cash provision of these digital assets.
In October, WSJ sources reported that the administration of US President Joe Biden is studying the possibility of including issuers of stablecoins in the legal field. They can be presented with the same requirements that are used in the regulation of the banking industry.