Cryptocurrency firms face new levels of government scrutiny as they attempt to go public.
At least three companies — Global bullish, Financial Internet Circleand eToro Group — failed to gain Securities and Exchange Commission (SEC) approval in their IPOs, the Wall Street Journal (WSJ) reported tuesday (January 24).
Sources told the WSJ that the SEC has no intention of blocking the companies from going public. However, crypto firms believe that the pace of the commission’s review has hampered the process, especially after the current crisis in the crypto market.
The report notes that when Coinbase went public in 2021, it received three letters from the SEC with questions. On the other hand, Bullish received more than 10 letters, sources said.
“Anyone proposing a crypto deal to the SEC should realize that there will be a lot of friction,” Scott Kimpelpartner in a law firm Hunter Andrews Kurthtold the WSJ.
Circle announced in December that it was postponing the merger of its Special Purpose Acquisition Company (SPAC) with Concord Acquisition Corp, PYMNTS wrote.
Co-founder and CEO of Circle Jeremy Allaire said at the time that becoming a public company was part of Circle’s core strategy to build trust and transparency, which has never been more important.
Bull announced it would end its plan to go public a few weeks later, abandoning a proposed SPAC merger with Far Peak Acquisition.
“Our quest to become a public company is taking longer than expected, but we respect the SEC’s ongoing work to establish new digital asset frameworks and clarify industry-specific disclosure and accounting complexities,” Bullish Chairman and CEO Brendan Blumer said at the time.
As PYMNTS reported, the two companies have determined that they are not ready to meet the December 31 deadline for Far Peak’s board of directors to vote on the merger.
Last year was a bad year for SPACs in the FinTech sector as a whole, Data from PYMNTS showedthe pace of these transactions slowing to single digits.
Meanwhile, the cryptocurrency industry is facing calls for greater scrutiny in the United States and abroad. Last week, EU Commissioner Mairead McGuinness appeal to the rest of the world follow the lead of the European Union, which became the first major jurisdiction to regulate crypto.
“If we fail to take this comprehensive approach, we are going to find that there are more and more problems,” McGuinness told CoinDesk. “Technology is borderless.”