Banker Bob Diamond was forced to pull the ripcord this week on his attempt to take stablecoin issuer Circle Internet Financial public via a special purpose acquisition company.
The ex-Barclays Plc boss’s dealmaking ability probably wasn’t the issue. Nor was the target’s financial performance: Circle earns interest income on the reserves that backstop its stablecoin USDC, and rising interest rates have thus benefited its bottom line.
Instead, the party pooper was almost certainly the Securities and Exchange Commission. Following the collapse of crypto exchange FTX in November, the regulator’s already elevated wariness of crypto is now at DEFCON 1. Trying to match a crypto company with a SPAC — another financial invention unloved by the SEC — is therefore a Sisyphean endeavor.
A roadblock on such listings might seem unfair — Circle is more transparent than some stablecoin operators — but on balance the SEC is right to halt crypto’s rush to the public markets to avoid giving the industry tacit legitimacy. A pause in such listings provides governments with more breathing space to decide how they want to regulate crypto.
Circle executives were scrupulously polite about the SEC when asked to explain why their $9 billion SPAC merger was terminated, making only vague references to “inertia” around getting the transaction authorized. (The company still aims to go public one day, so dissing your regulator in such circumstances would be inadvisable.) Yet there’s no hiding that the SEC has declined to declare its merger prospectus effective almost 18 months after the transaction was first announced.