Circle CEO Jeremy Allaire, has stated that the value of stablecoin USD Coin (USDC) has been declining due to the crackdown by US regulators on cryptocurrencies. Allaire made this comment during an interview with Bloomberg TV.
During the interview, Allaire stated that there is “a huge amount of concern globally about the US banking system.” He warned that investors would seek to ‘de-risk’ by exiting the country and move to favourable economic conditions.
The USDC depegged from the US dollar in March 2023 due to the banking crisis in the US, which resulted in Circle’s $3.3 billion USDC reserves in Silicon Valley Bank being frozen. Despite Circle’s reassurances that it had investor backing to fill the gap, the market responded negatively to the news, resulting in a massive loss of value.
At its peak, USDC’s market capitalization was $56 billion. It was the second-largest stablecoin after Tether (USDT). However, following the banking crisis and USDC’s depegging, the USDC’s market value has decreased by almost half and currently stands at $30.7 billion.
Following the collapse of Silicon Valley Bank and Silvergate Bank, concerns were raised about Circle’s exposure to the two struggling financial institutions. On March 2, 2023, Circle released the USDC Reserve Report along with an Attestation from auditing firm Deloitte, which showed that Circle had funds deposited in several institutions, including the now-defunct Silicon Valley Bank and Silvergate Bank. However, the exact amount of money Circle had at these two banks remains unknown.
Allaire’s comments on the regulatory environment in the US follow Coinbase’s warning that the lack of regulatory clarity would drive cryptocurrency businesses overseas. Allaire pointed out that the recent passage of the Markets in Crypto-Assets Act (MiCA) by the European Union and the push for crypto adoption in Hong Kong put the US at risk of falling behind.
Meanwhile, DeFi Planet reported that the European Union conducted a final vote on the Markets in Crypto-Assets Act (MiCA) legislation on April 20, 2023. The legislation was first proposed in 2020, and it is designed to create guidelines and standards for trading and issuing digital assets in the EU.
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