USDC Issuer Circle Refutes SEC Enforcement Action FUD

Following the SEC crackdown on Kraken last week and its subsequent threat of action against BUSD issuer Paxos, rumors have been flying about Circle being next.

Crypto Twitter was awash with unfounded claims that Circle had been issued a Wells notice by the SEC. A Wells notice is a threat of legal action giving the firm time to formulate a response, in this case, justify that a stablecoin is not a security (which is pretty obvious).

However, Chief Strategy Officer and Head of Global Policy at CirclePay, Dante Disparte, refuted the rumors on Feb. 15.

.@circle has not received a Wells notice. https://t.co/lE74zHVLka

— Dante Disparte (@ddisparte) February 14, 2023

The tweet was in response to a Fox News journalist who said the firm had received the notice. The journalist apologized for the mistake, but by then, the river of FUD had begun to flow.

CORRECTION: @circle has not received a Wells notice per @ddisparte and I truly do apologize for the mistake. I strive to get things right but also want to admit when I’m wrong. I’m sorry.

— Eleanor Terrett (@EleanorTerrett) February 14, 2023

SEC Targeting Stablecoins

The SEC’s war on crypto knows no bounds, as it is now claiming that staking services and stablecoins are securities. While the first may be questionable, the second is definitely pie in the sky and just overreach by the agency that regulates by enforcement.

DeFi and NFT founder ‘0xfoobar’ saw the humorous side of things:

Circle has issued a “Reverse Wells Notice” to Gary Gensler. An uno reverse card is a notification issued by companies to inform regulators that no violations exist. The SEC must cease all investigations until the court case accusing them of regulatory overreach has concluded

— foobar (@0xfoobar) February 14, 2023

The crypto ecosystem is on edge this week following the Wells notice sent to Paxos over its issuance of BUSD. Millions of dollars worth of the stablecoin were redeemed or converted into other stablecoins following the action.

As a result, BUSD market capitalization has shrunk by almost $900 million over the past couple of days.

The Future of Crypto in the US

On Feb. 15, Chief Policy Officer at the Blockchain Association, Jake Chervinsky, posted his thoughts on the recent regulatory crackdowns.

“The recent flurry of activity is jarring, but it’s not a surprise and it doesn’t spell doom for crypto in the USA.”

He added that 2022 was the worst year in crypto history, and FTX has tarnished the reputation of the entire industry.

Previously, Congress would have decided on regulation, not the agencies, but with a divided Congress, the watchdogs, such as the SEC, are taking things into their own hands.

“In turn, the agencies are stretching their authority beyond recognition to “get things done” without Congress, whether the law allows it or not.”

He concluded that no matter how many enforcement actions the SEC and CFTC bring, they are bound by legal reality:

“Neither has the authority to comprehensively regulate crypto, neither can obtain it through any amount of enforcement, and neither will ever have it without an act of Congress.”