Circle’s CEO, Jeremy Allaire, claims that anti-cryptocurrency crackdowns by US regulators have been a major factor in the decline in the market capitalization of its stablecoin, USD Coin (USDC.
The Circle chief’s comments on the US crackdown come amid heavy regulatory scrutiny following the collapse of FTX, a banking crisis and USDC’s momentary loss of peg to the dollar. During an interview with Bloomberg TV, Allaire noted that there is “tremendous global concern about the US banking system” and the “regulatory environment in the United States.”
USDC lost its peg to the dollar in mid-March, as a direct consequence of the US banking crisis. Circle’s USDC reserves, worth $3.3 billion, were locked up at Silicon Valley Bank, which was one of three pro-crypto banks shut down by US regulators. At the time, Circle had assured its clients that it had investor support to fill the gap, but the market was quick to react to the news, with USDC losing its peg to the US dollar.
USDC once had a market cap of $56 billion at its peak and was just behind the USDT token issued by Tether. However, since the banking crisis and USDC’s loss of pegs, the stablecoin’s market capitalization has nearly halved, currently standing at about $30.7 billion.
Coinbase had also warned that a lack of regulatory clarity may force cryptocurrency companies to look for opportunities abroad. With the recent passage of the Markets in Crypto-Assets Act (MiCA) by the European Parliament and the push for its adoption by Hong Kong, Allaire believes that the United States will be left behind.
“This is a critical time in America, and as I like to say, it’s really a time for Congress to step up.”
The US Securities and Exchange Commission, led by Gary Gensler, has stepped up since the FTX collapse. The SEC has threatened regulatory action against multiple cryptocurrency platforms and exchanges.
Gensler faced a lot of criticism from policy makers during the digital assets oversight hearing. Aside from policy makers, many cryptocurrency advocates have also questioned the authority of the SEC and Gensler.
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