Circle CEO Jeremy Allaire attributes the drastic drop in USDC’s market capitalization to the United States regulators’ intensified scrutiny of cryptocurrencies amid a turbulent financial landscape.
In recent news, Circle CEO Jeremy Allaire has attributed the plummeting market capitalization of its stablecoin, USDC, to the United States regulators’ stringent crackdown on cryptocurrencies.
The U.S. is coming for cryptos
This comes amid heightened regulatory scrutiny in the aftermath of the FTX exchange collapse, a banking crisis, and the temporary depegging of USDC.
Allaire, in a conversation with Bloomberg TV, emphasized the growing global apprehension surrounding the U.S. banking system and its regulatory environment. The depegging of USDC in March was a direct consequence of the U.S. banking crisis.
Circle’s $3.3 billion in USDC reserves were frozen at Silicon Valley Bank, one of the three crypto-friendly banks shuttered by regulators.
Although Circle promised its customers that investors would bridge the gap, the market reacted hastily, causing USDC to depeg from the U.S. dollar.
At its peak, USDC boasted a market cap of $56 billion, trailing only Tether-issued USDT. However, since the banking crisis and the depegging, USDC‘s market cap has plummeted to around $30.7 billion.
Coinbase has also cautioned that the absence of regulatory clarity may compel cryptocurrency companies to seek opportunities abroad.
With the European Parliament recently passing the Markets in Crypto-Assets Act (MiCA) and Hong Kong pushing for adoption, Allaire fears that the U.S. will fall behind. He urges Congress to take action at this crucial moment.
Gary Gensler, head of the U.S. Securities and Exchange Commission (SEC), has been relentless in enforcing regulations since the FTX collapse. The SEC has issued warnings of potential regulatory action against numerous crypto platforms and exchanges.
During an oversight hearing on digital assets, Gensler faced significant opposition from policymakers. Several crypto advocates have also challenged the authority of both the SEC and Gensler, intensifying the debate surrounding cryptocurrency regulation in the United States.