Coinbase and Circle USDC have been subject to years-long SEC investigation.

Recent filings reveal that the Securities and Exchange Commission has pressed crypto change Bitcoin to be more open about its relationship with Circle, a stablecoin issuer.

A sample of correspondence from January through March 2025 was posted to the SEC on Tuesday.

The Commission’s Division of Corporation Finance wrote a letter in January asking Coinbase to define how” stablecoin profit is derived, in part, from the distribution of USDC” in its upcoming statements, including” the method used to identify your share of bitcoin income.”

Financial statements dating back as far back as 2022 were the focus of the SEC’s investigation, which requested that some revelations been revised and that Coinbase clarify how crypto profit is recognized. Under previous SEC Chair and writer Gary Gensler, the firm’s rely on Coinbase and Circle’s marriage, among other broader opinions, dates back to October 2023.

According to Cantor Fitzgerald researcher Brett Knoblauch,” I do not believe it to have been that opaque,” adding that Coinbase and Circle reveal important statistics to help investors find out how much money USDC’s reserves make.

According to ‘s Chief Legal Officer, Paul Grewal, the bank’s chief legal officer, said on X, previously Online, that SEC’s demands had been “fully resolved” lately, without any “restatements or modifications” to its prior income statements.

” As always, we remain focused on bringing the next billion onchain,” he said, adding that Coinbase’s dialogue with the SEC” started two years after” its Wall Street debut.

received Grewal’s statement in a message from a Coinbase representative.

Coinbase has provided financial statements that have been audited for years, but the San Francisco-based company has been a little cautious about Circle. The business plans to go public soon and manages USDC, the second-largest stablecoin by market cap in the market.

Coinbase generates revenue from assets, including U.S. Treasuries and cash, that support Circle’s USDC stablecoin, which is worth$ 60 billion. Coinbase reported in February that the company made$ 990 million in stablecoin revenue for the full year in 2024, an increase of 33 % over the prior year.

As Coinbase looks to expand beyond user fees, that marked a new high. However, Coinbase’s CEO, Brian Armstrong, stated that Tether’s USDT would take the place of the world’s “number one dollar stablecoin.”

According to a Circle IPO filing this month, USDC reserves account for half of Circle’s remaining revenue. In 2024, the business claimed to have earned$ 1.7 billion in both revenue and reserve income.

contacted Circle for comment, but Circle did not respond right away.

More thorough explanations of how Coinbase generates cash from USDC are provided in Coinbase’s most recent earnings statement than in its most recent filings from the previous year. Details about how Circle and Coinbase’s business relationship have changed are included in that description.

When trading volumes dropped in 2023, Coinbase embraced stablecoin as a means of making money through its subscriptions and services program. The section, which includes revenue from staking and the custody arm of the exchange, temporarily surpassed transaction revenue as the company’s main source of income in Q3 2023.

Coinbase purchased a minority stake in Circle in August 2023, dissolved the so-called Centre Consortium, a governing body for the U.S. dollar-pegged token, which was established by both companies in 2018.

According to the earnings statement, Coinbase earned revenue from USDC reserves based on the following dynamic:” The greater the proportion of USDC in circulation generally and on our platform, the greater our revenue generated under the Circle Agreement.”

According to the filing, Coinbase’s agreement with Circle was modified in November, allowing third parties to potentially receive fees connected to USDC circulating supply as well.

Legislation that would provide a pathway to legality for stablecoin issuers like Circle and Tether is currently being considered by lawmakers in Washington, D.C. A regulatory framework for stablecoins, according to experts, could also lead to 1, 000 new competitors.

edited by Stacy Elliott.