Friday, 26 April 2024
Trending

Crypto News

Circle CEO blames US crypto crackdown for declining USDC market cap

Circle CEO blames US crypto crackdown for declining USDC market cap

Circle CEO Jeremy Allaire in a recent interview said that the cryptocurrency crackdown by the United States regulators was a major factor behind its stablecoin USD Coin’s (USDC) declining market capitalization.

Circle chief’s comments on the U.S. crackdown come amid heavy regulatory scrutiny following the collapse of the FTX exchange, a banking crisis and USDC’s momentary depegging. Allaire during an interview with Bloomberg TV noted that there is a “huge amount of concern globally about the US banking system,” and the “regulatory environment in the US.”

USDC depegged in March earlier this year was a direct result of the U.S. banking crisis. Circle’s $3.3 billion worth of USDC reserves was stuck with Silicon Valley Bank which was one of the three crypto-friendly banks shut down by regulators. At the time Circle had assured its customers that they have the backing from investors to fill the gap but the market reacted quickly to the news and USDC value depegged from the U.S. dollar.

USDC market capitalization fell by 32% in 2023. Source: CoinMarketCap

USDC once had a market cap of $56 billion at the peak and was sitting right behind Tether-issued USDT. However, with the advent of the banking crisis and its depeg, USDC’s market cap has been cut nearly in half and currently sitting at $30.7 billion.

Related: Circle’s Fed payment rail goal could be crushed by NY Fed’s policy change

Coinbase had also warned that the lack of regulatory clarity may force crypto companies to look for opportunities overseas. With the recent passing of the Markets in Crypto-Assets Act, known as MiCA by the European Parliament and the push for adoption by Hong Kong, Allaire believes the U.S., will be left behind.

It’s a critical moment here in the US and, as I like to say, it’s really a moment for Congress to step up.

The U.S. Securities and Exchange Commission led by Gary Gensler has been on an enforcement spree since the FTX collapse saga. The SEC has threatened regulatory action against multiple crypto platforms and exchanges.

Gensler faced a lot of pushback from policymakers during the oversight hearing on digital assets. Apart from policymakers, many crypto proponents have also questioned the authority of SEC and Gensler.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom