The financial giant said it would temporarily halt public offerings through special purpose acquisition companies (SPACs). It’s concerned about increased oversight into SPACs from the SEC, which has yet to solidify specific guidelines.

Why should we care?
Citigroup has been a leading underwriter of SPACs over the past two years. The SEC’s proposed guidelines would require SPAC IPO underwriters to also underwrite the acquisition transaction, which, at present, leaves underwriters with undetermined liability. This sudden SPAC halt rebukes the idea that major institutional backing guarantees the runaway success of a new financial instrument. This may be a lesson to many crypto communities, which believe that significant VC investment in blockchain-based initiatives means that crypto can weather any regulatory storm. Citigroup’s SPAC pause doesn’t appear permanent, but it proves that the seeming momentum of a financial space can come to a sudden halt—and, potentially, pivot significantly—in the face of political pressures. And, according to Bloomberg, Citigroup isn’t the only institution to pause SPAC mergers. SPACs already face tempered enthusiasm given their disappointing track record; if the regulations provide clarity and stability, then the SEC’s new reporting and underwriting requirements may breathe new life into SPACs after this lull.