It is pretty tricky for companies in the crypto space to create a niche for themselves. The space is relatively contemporary and, thus, is constantly under surveillance. Mishaps are usually amplified by people outside the community, while progress is often overlooked. Furthermore, lines of distinction are drawn and re-drawn to discern companies from the traditional side of the spectrum relative to the novel ones. Demystifying why that isn’t necessarily the case, stablecoin issuer Circle’s CFO Jeremy Fox-Geen recently asserted that the firm is a registered financial services company like the likes of PayPal, Apple, and Venmo.
Elaborating on the common regulatory grounds, the executive said,
“The framework we operate under is widely trusted. It is used by the largest payments companies and protects hundreds of tens if not hundreds of millions of individuals with billions of dollars of money in these systems.”
Are Circle’s hands all clean?
Circle was under community scrutiny for a while, and there were allegations that the company was losing money because it was paying incentives to its reserve holders. Theories revolving around how some funds are used to mint new USDC tokens have also been doing the rounds.
Commenting on the same, Fox-Geen clarified that the contentions were speculative, inaccurate, and only intended to stir in FUD among community members.
“These are absurd rumors, and the people who wrote them don’t understand how banks work. Circle does not pay any banks to hold fiat currency. That’s not how banks work. Banks pay their customers interest to receive that fiat currency.”
Fox-Geen further said that “literally everything” about Circle has been documented and fully disclosed, and the company had no such arrangement with any bank. Nonetheless, he opined that people’s concerns were justified, owing to the Terra ecosystem’s meltdown and other companies’ ongoing liquidity crisis.
The executive also spelled out that Circle has no exposure to those companies. He added,
“We are not allowed to lend them, borrow against them, or use them to pay our bills. The reserve is held in segregated accounts for the benefit of USDC customers, and under money transmission laws.”
Is an IPO on the cards?
Circle’s CFO expects the company to go public via the SPAC route by the end of this year. He emphasized that the crypto industry is “novel,” and so is Circle. Thus, the company is focused on providing “complete and accurate” disclosures before the finale.
Concerning the timeline, Fox-Geen revealed,
“Although the timing of that is not in our hands, it is in the hands of the SEC; our current expectation is that we will emerge as a public company sometime in the fourth quarter of this year.”
Well, Circle is not the only crypto-related company expected to go public. Blockchain payments firm Ripple is also likely to go public as soon its legal battle against the SEC concludes.