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Circle CEO Jeremy Allaire on Wednesday said regulatory burden and regulators pushing to debunk the crypto market are causing the market value of USD Coin (USDC) stablecoin to continue falling. Allaire revealed investors are pushing to “de-risk out of the US” amid a lack of regulatory clarity in the country.
USDC Issuer Circle CEO Hints At US Exit Amid Regulatory and Banking Woes
The market cap of USDC stablecoin tumbled to $30.6 billion today, continuing its fall since mid-2022. While USDC is falling, the market cap of other stablecoins such as Tether (USDT) recovered above $81 billion amid the market rally this year.
During an interview on Bloomberg Television on April 26, Circle CEO Jeremy Allaire said:
“We are seeing a huge amount of concern globally about the US banking system. We are seeing concern about the regulatory environment in the US.”
USDC stablecoin reserves are majority backed by US treasuries and cash deposits. The USDC depegged to the US dollar during the banking crisis after US regulators closed three crypto-friendly banks Silvergate, Silicon Valley Bank, and Signature under Operation Choke Point 2.0.
Crypto exchanges, companies, and investors are moving away from USDC as it is OFAC-compliant. After the U.S. Treasury Dept’s OFAC sanctioned crypto mixers like Tornado Cash, Circle immediately froze USDC in blacklisted wallet addresses.
Regulators have heightened scrutiny on stablecoins after the Terra-LUNA crisis and FTX fallout. As a result, several U.S.-based crypto exchanges and companies are exiting the U.S.
Recently, Circle Internet Financial has applied for regulatory approval in France, selecting the country for its European expansion. With the European Union’s MiCA regulation approved, Circle will expand its presence and engagement with regulators across the European market.
NY Fed Policy Change Impacts Circle Fund
The New York Fed made changes to the Policy on Counterparties for Market Operations and Reverse Repo Counterparties eligibility requirements. It will make Circle’s BlackRock-managed USDC reserve fund Circle Reserve Fund deemed ineligible for the reverse repurchase program.
The Fed indirectly denied access to stablecoins, making the program eligible only for traditional financial institutions.
Also Read: Bitcoin (BTC) Price Up By 3.5%, Can Shoot to $42,000 Amid US Banking Crisis
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