Circle is under investigation by the SEC, as the firm reveals it was issued a subpoena by the regulatory body in July 2021.
The United States Securities and Exchange Commission has subpoenaed Circle, the issuer of USD coins (USDC), according to a document filed on the SEC website. This is different from the investigation relating to Circle after the SEC issued a $10 million fine for the lack of registration of its subsidiary Poloniex. Circle first received the SEC notice in July 2021, but the company only disclosed it this month.
Circle under the microscope
Circle has already commented on the matter, saying that it will fully cooperate with the SEC. The company will have to provide “documents and information concerning some of our assets, client programs and operations”. It does not offer too much detail on the nature of the investigation.
The subpoena arrived soon after Circle released its yield product, Circle Yield. There is no indication that this was the motivation for the subpoena, but the SEC has recently focused on restricting these products.
Circle has been making an effort to ensure that its finances are transparent, besides taking steps to ensure regulatory compliance. That hasn’t stopped the company from realizing its plans. Circle announced in early August 2021 that it had applied to be a federally chartered bank.
Stablecoins appear to be a target for regulators, many of whom, like the US Treasury, have already started working on scrutinizing the sector. It will be a major priority for U.S. authorities, who have begun a much larger effort into regulating the crypto market.
Stablecoins threatened?
The SEC makes no effort when it comes to the crypto market. Particularly in the past year, the agency has begun multiple investigations and is more closely examining the crypto market. . The Ripple lawsuit, one of the most protracted cases on the market, has it most of the time, but the SEC isn’t letting any projects or platforms go under the radar.
Coinbase, which stole the show in 2021 for its public listing, is also coming under fire from the regulatory body. The San Francisco-based exchange scrapped its idea of a lending platform after the SEC said it could be a violation of securities laws. Such acts are rising in frequency in the market, as these entities fear heavy fines, or worse (though unlikely), criminal charges.
Stable coins are of concern to lawmakers around the world, who fear that the use of these fiat-linked assets could adversely affect national currencies. The U.S., however, is among the most concerned, and to that end, is putting a much larger focus on its regulation.
