May 2019 Summaries

Circle Internet Financial highlights the challenges posed by recent U.S. regulatory signals around digital assets, emphasizing the need for a clear, forward-looking regulatory framework. They argue that existing laws, like the 1946 Howey test, are outdated for 21st-century technologies, as digital assets can simultaneously function as securities, commodities, and currencies. The SEC's new Framework for "Investment Contract" Analysis of Digital Assets introduces the concept of "Active Participants," potentially broadening the scope of what can be considered a security and diminishing the role of decentralization. This has led to increased uncertainty and frustration within the crypto community, as the Framework complicates the determination of a digital asset's status, lacking clear guidance and weighting of factors. Circle advocates for legislative changes, such as the Token Taxonomy Act, to foster innovation and prevent the U.S. from falling behind countries like Switzerland and Singapore, which have established more contemporary digital asset regulations. Despite the regulatory challenges, Circle remains optimistic about future changes and continues to engage with policymakers to drive the industry forward.

Circle Internet Financial highlights the challenges and frustrations it faces due to the current state of U.S. crypto policy, specifically the broad regulatory interpretation that categorizes many crypto assets as securities. This has led Circle to geofence certain assets on Poloniex from U.S. users to comply with existing laws, despite believing that these assets should not be classified as securities. The company emphasizes the need for updated regulatory frameworks that can accommodate innovative technologies like digital assets, which do not neatly fit into existing categories of securities, commodities, or currencies. Circle has been actively advocating for clearer regulations by engaging with U.S. Congress and supporting legislation like the Token Taxonomy Act, which aims to provide regulatory certainty by excluding digital tokens from being defined as securities. Furthermore, Circle has collaborated with other industry leaders to form advocacy groups such as the Blockchain Association and Global Digital Finance to promote innovation and set industry standards internationally. The organization continues to engage with global regulatory bodies and urges lawmakers to recognize the potential economic benefits of crypto technologies, warning that without action, the U.S. risks falling behind in the global crypto and blockchain innovation race.

Circle Internet Financial released an attestation report, verified by Grant Thornton LLP, confirming that as of April 30, 2019, the USD Coin (USDC) tokens in circulation were fully backed by US dollars held in custody accounts. The report indicates that there were 293,184,174 USDC tokens issued, with $293,351,374 in corresponding dollar reserves, ensuring that the tokens did not exceed the available dollar balance. Grant Thornton LLP will continue to provide monthly attestation reports on Circle's USDC reserves. Circle aims to enhance the global movement of money by making financial transactions more accessible, inclusive, and efficient, which they believe will foster economic opportunity and prosperity worldwide.