Circle CEO Jeremy Allaire says US regulators' crackdown on cryptocurrencies is a major factor in its stablecoin's USD Coin drop.
The Circle chief made the comments on the US crackdown amid intense regulatory scrutiny following the collapse of the FTX exchange, the banking crisis and the temporary decoupling of USDC. In an interview with Bloomberg Television, Allaire pointed to "global concerns about the US ban the king system " and "the US regulatory environment." USDC was de-pegged in March as a direct result of the US banking crisis. Circle's $3.3 billion worth of USDC reserves are held at Silicon Valley Bank, one of three crypto-friendly banks shut down by regulators. At the time, Circle assured its clients that it had investor support to fill the gap, but the market reacted quickly to the news, with USDC depegged from the US dollar.
USDC had a market cap of $56 billion at its peak, closely following Tether's USDT. However, since the banking crisis and the USDC depeg, the stablecoin's market capitalization has nearly halved to $30.7 billion. Coinbase also warned that regulatory clarity could force crypto firms to seek opportunities overseas. With the European Parliament recently passing the Markets in Cryptoassets Act (MiCA) and pushing for Hong Kong to pass it, Allaire believes the US will be left behind.
"This is a pivotal moment for America, and as I would say, this is really a moment for Congress to step up." Since the FTX debacle, the SEC, led by Gary Gensler, has been vigorously enforcing the law. The US Securities and Exchange Commission has threatened regulatory action against several crypto platforms and exchanges. Gensler faced plenty of pushback from policymakers during oversight hearings on digital assets. In addition to policymakers, many crypto proponents also question the auth ority of the SEC and Gensler.
