The US Securities and Exchange Commission (SEC) has issued a subpoena against Circle Financial, the issuer of the USDC stablecoin. The investigative subpoena was issued against Circle in July after the firm filed for a $4.5 billion SPAC deal with Concord Acquisition Corp.
This subpoena comes when the SEC has ramped up its efforts to scrutinize the crypto sector, with the latest focus being on stablecoins.
Circle Cooperating with SEC
The SEC is seeking information regarding Circle’s holdings, customer programs and operations. In its response to various media publications, the USDC issuer has stated that it is cooperating with the regulator in these investigations. However, the firm has refrained from providing any specifics of this case.
The purpose of this subpoena is yet to be made clear by the SEC. However, various speculations have stated that it would be in regards to Circle Yield, an interest-bearing product that Circle has revealed plans of launching.
This is not the first time that Circe has been at loggerheads. In July, the firm announced that it had set aside $10 million to be used in a possible settlement with the regulator regarding Poloniex. Poloniex is a cryptocurrency exchange that was a former subsidiary of Circle.
However, Poloniex later made a settlement with the SEC, after which Circle denounced that it was part of the deal.
The latest focus has been on defining security and which assets are termed as securities and which ones are cryptocurrencies. Last month, the SEC issued a Wells Notice against Coinbase because the exchange wanted to launch a Lend Program. Following this threat, Coinbase suspended this lending program.
This move by the SEC sparked much debate across the crypto charts, with the CEO of Coinbase, Brian Armstrong stated that the commission had a sketchy approach regarding cryptocurrencies. The lack of clarity in cryptocurrencies has also made crypto firms have a hard time knowing which products are accepted and those that are not accepted.
The SEC has been adamant in regulations regarding stablecoins. Recently, the SEC Chair, Gary Gensler, appeared before a hearing with the House Committee of Financial Services. During this hearing, Gensler stated that stablecoins were becoming a priority for the commission because they wanted to assess the financial stability risks of these coins.
The notice by the SEC also follows another report from Congress involving discussions on the risks that stablecoins posed to financial stability.
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