The cryptocurrency market has been awash with anxiety and skepticism due to regulatory crackdowns. Circle, a prominent player in the stablecoin market, has provided a much-needed confidence boost in a tweet when the company announced that they have not received a Wells notice from regulators.
For those who are not aware, a Wells notice is a notification from the Securities and Exchange Commission (SEC) that an enforcement action may be forthcoming. Basically it’s a warning from the SEC that you should be lawyering up because they’re coming for you.
Paxos vs. Circle: The Battle for Stablecoin Supremacy
The stablecoin market has been a battlefield, with Circle and Paxos jockeying for position among regulated issuers. According to Bloomberg, Circle accused Paxos of misrepresenting the nature of BUSD's underlying assets. BUSD is a stablecoin that is meant to be backed by assets that are "one-to-one" with the US dollar. However, Circle claimed that Paxos was not holding the required assets and instead investing the funds into various ventures. This caused a stir in the market, with Paxos disputing the claims.
SEC Enforcement Action Against Kraken Adds to Market Concerns
The SEC has taken enforcement actions against some other big players in the cryptocurrency market, which has added to the FUD among investors. Kraken, a popular cryptocurrency exchange, was recently fined $30 million by the SEC for failing to register as a futures commission merchant. As a result, Kraken will stop offering staking services.
Many exchanges put a large focus on staking services, which made many think the SEC was about to crack down on a number of large players.
It's worth noting that Circle has a connection to Coinbase, a major cryptocurrency exchange. Circle has a stake in Coinbase, and the two companies work closely together.