Sources: increased SEC scrutiny of Circle, eToro, Galaxy Digital, and other crypto companies has blocked them from going public in the US over the past year
Companies including Circle Internet Financial and eToro have failed to secure the regulator's approval — Crypto's Crash Has Been Swift but Largely Self-Contained. Tweets: @matthewstoller , @johnreedstark , and @pt Tweets: Matt Stoller / @matthewstoller : SEC Chair Gary Gensler isn't letting crypto firms go public. https://www.wsj.com/... John Reed Stark / @johnreedstark : Having served for 11 yrs as Chief of the SEC's Office of Internet Enforcement, I believe the design language of the crypto-Ponzi scheme is a multi-faceted grift, comprised of a wide range of falsehoods, all calculated to dupe consumers/investors. Here are 12 egregious examples:🧵 Parker / @pt : If only there were ways for these kinds of companies to get liquidity that circumvented legal processes for selling their equity on stock exchanges. https://twitter.com/...
Context & Ripple Effects
The SEC's posture toward crypto has been hardening for months: Chair Gary Gensler warned after last year's market turmoil that firms offering crypto lending must comply with federal securities laws, and the agency followed through by suing Bittrex over allegedly running an unregistered exchange. The new reporting extends that campaign from enforcement into capital markets.
Blocking Circle, eToro, and Galaxy Digital from going public closes the most prestigious exit route available to crypto firms, compounding the pressure created when US banks began backing away from crypto clients earlier this year. For companies like Circle — which has been chasing a listing while posting mixed results — the door to public-market validation stays shut.
First-order effects
- Circle, eToro, Galaxy Digital, and similar firms are locked out of US public listings, forcing them to remain private or pursue alternative routes such as M&A — eToro's agreement to acquire TradeZero for up to $231 million shows the pivot toward buying growth rather than floating.
Second-order effects
- With public markets closed and lenders retreating, crypto companies' access to capital narrows further, pushing valuations down and making consolidation through acquisitions like eToro–TradeZero more likely than IPOs.
Third-order effects
- If the pattern holds, the US crypto industry bifurcates: firms that register as securities businesses survive inside the regulated perimeter, while others list offshore or shrink — echoing the uncertainty Circle flagged back in 2019 about the SEC's digital-asset framework driving projects out of the country.
The trend: The SEC is regulating crypto through gatekeeping — enforcement actions and blocked listings rather than rulemaking — steering the industry toward private ownership, offshore venues, and consolidation.