Circle CEO Blames The US Policy After USDC’s Massive Fall

Key Points:

• According to Circle CEO Jeremy Allaire, the regulatory burden and regulators’ efforts to debunk the crypto market are causing the USDC market value to continue falling.
• Investors, according to Allaire, are attempting to “de-risk out of the US” due to a lack of regulatory clarity in the country.
• Because USDC is OFAC-compliant, crypto companies and investors are shifting away from it.

According to Jeremy Allaire, CEO of Circle Internet Financial, the regulatory burden and regulators’ efforts to debunk the crypto market are causing the market value of USD Coin (USDC) stablecoin to continue falling.

During an interview with Bloomberg Television, Allaire stated that investors’ desire to “de-risk out of the US” is contributing to the USDC’s decline in market value.

USD Coin is still one of the most trusted stablecoins in the crypto sector, but its close ties to the US have caused it to lose ground in key metrics recently.

The majority of Circle’s stablecoin reserves are backed by US treasuries and cash deposits. During the banking crisis, the USD Coin was pegged to the US dollar after US regulators closed three crypto-friendly banks, Silvergate, Silicon Valley Bank, and Signature, as part of Operation Choke Point 2.0.

The USDC briefly fell to as low as $0.88 before recovering a few days later. However, according to CoinMarketCap data, the token’s overall market capitalization has continued to fall and now stands at around $30.7 billion, down from a peak of more than $56 billion in 2022.

“We are seeing a huge amount of concern globally about the U.S. banking system. We are seeing concern about the regulatory environment in the US,” Allaire told Bloomberg.

Following the Terra crisis and the FTX fallout, regulators have increased their scrutiny of stablecoins. As a result, several US-based cryptocurrency exchanges and companies are leaving the country.

Because USD Coin is OFAC-compliant, cryptocurrency exchanges, companies, and investors are abandoning it. Circle immediately froze USDC in blacklisted wallet addresses after the US Treasury Department’s OFAC-sanctioned crypto mixers like Tornado Cash.

Crypto companies are urging US lawmakers to pass legislation clarifying the legal status of cryptoassets. However, the prospects for passing stablecoin rules in the near future have dimmed due to partisan divides.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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