SEC Stablecoin Crackdown: Circle Denies Rumors About Receiving Wells Notice From Regulator

Stablecoin giant Circle denied rumors that it received a litigation notice from the U.S. Securities and Exchange Commission (SEC) over its dollar-pegged crypto asset USD Coin (USDC).

Earlier this week, stablecoin issuer Paxos received a Wells Notice from the SEC over its stablecoin BUSD just days after the financial regulator charged cryptocurrency exchange platform Kraken with illegal selling of security.

On Tuesday, Fox Business reporter Eleanor Terrett, in a now-deleted tweet revealed that Circle was ordered by the SEC to stop the sale of the USDC because the stablecoin in question is unregistered security.

Terrett's tweet was abruptly slammed by Circle chief strategy officer Dante Disparte, who made the response in as fast as 15 minutes and refuted the claim saying that the company "has not received a Wells Notice."

Terrett later apologized and explained that she only "went with the word of several trusted sources on this."

She said in another tweet, "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."

Disparate was previously asked if it received a notice from the SEC concerning its stablecoin USDC.

"Circle maintains that USDC is a regulated dollar digital currency issued as a stored value under U.S. money transmission law," Disparate said.

"Facts and circumstances in any type of regulatory action like this are all different, as are the structural and regulatory considerations with each of the cryptocurrencies that are in circulation around the world," he added.

While Circle denied the rumors, it is worth noting that it does not necessarily mean that the SEC will not start investigating the firm.

In January, Circle CEO Jeremy Allaire said that he is expecting the U.S. Congress to focus on stablecoin regulation this year.

"Stablecoins are the lowest-hanging fruit," Allaire said during the World Economic Forum's annual conference in Davos, Switzerland, noting that "It's the most straightforward. It's a foundational piece."

Allaire said that USDC is a good example of how the use of stablecoin is growing, adding that lawmakers both in the U.S. and abroad are becoming more aware of the "significant size and business" that the crypto asset can offer and provide.

The CEO also forecasted that the year 2023 is the year when stablecoin issuers would be "normalized in almost every major market."

However, Allaire's prediction may seem to be a little off considering that the SEC and other financial regulators in the U.S. have started their crackdown in the particular crypto sector.