Circle’s chief executive officer, Jeremy Allaire, claims that the crackdown on cryptocurrencies by U.S. regulators has been a significant factor in the declining market capitalization of its stablecoin, USD Coin (USDC).
Following the collapse of the FTX exchange, a banking crisis, and the momentary de-pegging of the USDC, the Circle CEO commented on U.S. enforcement amidst heightened regulatory scrutiny. During an interview with Bloomberg TV, Allaire stated, “a great deal of concern about the U.S. banking system and the U.S. regulatory environment.”
March’s depeg was a direct consequence of the U.S. banking crisis. The $3.3 billion in USDC reserves held by Silicon Valley Bank, one of the three crypto-friendly institutions shut down by regulators, belonged to Circle.
Circle assured its customers at the time that it had the backing of investors to fill the deficit, but the market reacted swiftly to the news, and USDC depegged from the U.S. dollar.
At its apex, USDC had a market capitalization of $56 billion and was immediately behind Tether-issued USDT. However, since the banking crisis and USDC’s depeg, the stablecoin’s market capitalization has decreased by nearly half, to $30.7 billion.
Coinbase cautioned that regulatory clarity could force cryptocurrency companies to seek opportunities abroad. Allaire believes the United States will need to catch up due to the recent adoption of the Markets in Crypto-Assets Act (MiCA) by the European Parliament and the drive for adoption by Hong Kong.
“It’s a critical moment here in the U.S., and, as I like to say, it’s really a moment for Congress to step up.”
Since the FTX collapse saga, the U.S. Securities and Exchange Commission, commanded by Gary Gensler, has been on an enforcement spree. The SEC has threatened multiple crypto platforms and exchanges with regulatory action.
During the digital assets supervision hearing, Gensler faced considerable opposition from policymakers. In addition to policymakers, numerous crypto advocates have questioned the authority of the SEC and Gensler.
