Circle’s Previous Attempt To Go Public Was Dogged by SEC Concerns That USDC Could Be a Security: Report

USDC issuer Circle has outlined plans for a proposed initial public offering (IPO), but a new report indicates the stablecoin company’s previous attempt to go public was dogged by regulatory questions from the U.S. Securities and Exchange Commission (SEC).

Back in July 2021, Circle initially announced plans to go public via a merger with Concord Acquisition Corp, a publicly traded special purpose acquisition company (SPAC).

Those plans were called off in December 2022.

Barron’s utilized public records requests and secured 155 pages worth of documents from the SEC regarding that failed SPAC merger. Those records indicate the SEC asked Circle about risks regarding USDC being classified as a security.

USDC is the second-largest stablecoin by market cap and aims to maintain a 1:1 peg with the US dollar.

The SEC also reportedly quizzed Circle about whether it could be classified as an “investment company” rather than an “operating company,” which could mean more restrictions on business activities.

The SEC and Circle corresponded on the documents related to the attempted SPAC for nearly a year.

Securities attorney Xavier Kowalski told Barron’s that the documents indicate Circle seemed to have answered the SEC’s questions and put itself on the path to becoming a public company by October 2022, two months before the proposed merger collapsed.

In January, Circle announced it was kicking off its second attempt to go public, this time via traditional IPO.

Circle and Coinbase co-created USDC in 2018 and jointly managed the asset through the Centre Consortium until last year.

Last August, Circle CEO Jeremy Allaire announced that his company would bring all of USDC’s governance and operations responsibilities in-house to streamline management of the stablecoin.

Coinbase said at the time that it would purchase an equity stake in Circle. The top US crypto exchange became a public company in April 2021.

 

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