The US Securities and Exchange Commission (SEC) is apparently blocking crypto-related companies from going public as the crypto market is trying to recover from a cascade of bankruptcies.
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According to a report by The Wall Street Journal, crypto exchange Bullish, USDC issuer Circle and fintech firm eToro have failed to secure approvals from the SEC required for companies before going public. Although the SEC didn't try to stop the companies from going public, people close to the matter told the media that the companies repeatedly received a variety of questions from the regulator regarding their businesses.
For example, while Coinbase received only three letters with questions from the SEC before going public in 2021, another crypto exchange Bullish got over 10 letters over more than a year. Mike Novogratz's venture firm Galaxy Digital, which is also targeting to go public in the US in the foreseeable future, received one letter from the SEC with over 90 questions, sources close to the matter say.
The report points out that for many crypto companies going public through a SPAC deal was the only option. However, the long review process conducted by the SEC makes it almost impossible for companies to close the deal before the deadline (typically, SPACs have two years to complete an acquisition or they must return funding to investors).
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