USDC Issuer Circle Cooperates With The SEC After Receiving Investigative Subpoena

• USDC Issuer Circle has disclosed that it is under investigation by the SEC.
• The company says that it is “fully cooperating” with the Commission regarding the investigation.
• Circle had crossed paths with the SEC after it was fined $10 million for the infringements of its ex-subsidiary, Poloniex.

The SEC is flexing its regulatory muscles and the latest company to feel the regulatory pressure is Circle, the issuer of USDC. Circle says that it is cooperating with the SEC’s investigation as it douses tensions.

Investigative Subpoena

Circle, the issuer of stablecoin USDC has come under investigation by the SEC according to the regulatory filings it submitted to the regulator. The company was made aware of the investigations through an investigative subpoena that sought to reveal salient details about the firm’s operation.

The company stated in its October S4 filing, “In 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.” 

So far, information obtained from Circle infers that it is fully cooperating with the SEC for the investigation.

Circle and the SEC have a bit of history together, going back to August when Poloniex, Circle’s ex-subsidiary had to pay $10million to the SEC for “aggressive listing policy” and other infractions. Circle had unveiled plans to become a Federal Bank in August, bringing it under the purview of stricter regulatory policies. The move might be construed as being made in anticipation of increasing regulations on the horizon for stablecoins.

Tighter Regulations For Stablecoins

The specter of regulation looms ahead for stablecoins with analysts drawing their inferences from the recent comments of government officials. In July, Treasury Secretary, Janet Yellen, made a frantic call for regulators to act quickly to develop a regulatory framework for stablecoins. Fed Chair, Jerome Powell shared similar thoughts with Yellen saying stablecoins are like bank deposits that are expanding at a rapid pace “but without appropriate regulation”.

For Gary Gensler, stablecoins are securities and they fall within the ambit of the SEC. The SEC Chair spoke to the American Bar Association saying that they “are implicated by the securities laws and must work within our securities regime.

Stablecoins have grown in popularity and have attained a market cap of $129 billion, USDC is the second largest in terms of market capitalization with $32.38 billion while USDT remains the top dog with a market cap of $68.06 billion.