Following the SEC’s crackdown on Kraken last week and its subsequent threat of action against BUSD issuer Paxos, rumors have surfaced that Circle will be next.
Crypto Twitter was inundated with unsubstantiated claims that the SEC had issued a notice from Wells to Circle. A Wells notice is a threat of legal action that gives the company time to formulate a response, in this case justifying that a stablecoin is not a security (which is pretty obvious).
However, CirclePay’s Director of Strategy and Global Policy Director, Dante Disparte, refuted the rumors on February 15.
.@circle has not received a notice from Wells. https://t.co/lE74zHVLka
— Dante Disparte (@ddisparte) February 14, 2023
The tweet was in response to a Fox News reporter who said the company had received the notice. The journalist apologized for the mistake, but by then the river of FUD had started to run.
CORRECTION: @circle You have not received a notice from Wells for @ddisparte and i really apologize for the mistake. I strive to do things right, but I 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 now claims that staking services and stablecoins are securities. While the former may be questionable, the latter is definitely child’s play and simply overreach by the agency regulating the app.
DeFi and NFT founder ‘0xfoobar’ saw the humorous side of things:
Circle has issued a “Reverse Well Notice” to Gary Gensler. A reverse card one is a notification issued by companies to inform regulators that there are no violations. The SEC should cease all investigations until the court case accusing them of regulatory overreach is concluded.
-foobar (@0xfoobar) February 14, 2023
The crypto ecosystem is on edge this week following Wells’ notice sent to Paxos regarding its BUSD issuance. Millions of dollars worth of stablecoins were redeemed or converted into other stablecoins after the action.
As a result, BUSD’s market capitalization has shrunk by nearly $900 million in the past few days.
The future of Crypto in the US
On February 15, Blockchain Association director of policy, Jake Chervinsky, aware your thoughts on the recent regulatory crackdown.
“The recent flurry of activity is jarring, but it is not a surprise and it does not spell the end of cryptocurrencies in the US.”
He added that 2022 was the worst year in cryptocurrency 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, watchdogs like the SEC are taking matters 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.”
It concluded that no matter how many enforcement actions the SEC and CFTC file, they are bound by legal reality:
“Neither of them have the authority to comprehensively regulate cryptocurrency, nor can they get it through any kind of enforcement, nor will they without an act of Congress.”
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