Circle CEO blames US regulators for the decrease in USDC capitalization

Jeremy Allaire stated that there is currently concern about the banking system and regulatory environment in the States

26.04.2023 - 09:20

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4 min

What’s new? Circle CEO Jeremy Allaire said that the drop in the market value of his company’s USDC stablecoin has been driven by investors’ desire to “de-risk out of the US” amid banking and regulatory problems. According to him, there is currently concern about the banking system and regulatory environment in the States. USDC lost its peg to the dollar after the Silicon Valley Bank collapse in March but has since stabilized. However, its market capitalization has continued to fall and by April 26 it reached $30,69 billion, down from a peak of $56 billion in 2022, according to CoinGecko.

Bloomberg’s material

What is going on with Circle? USDC lost parity with the dollar after it emerged that Circle held 8% of its asset reserves (over $3 billion) in the bankrupt SVB. On March 13, the company resumed access to deposits at SVB and began transferring reserves to BNY Mellon Bank. At the time, Allaire said USDC was “the safest digital dollar on the internet.”

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After the collapse of SVB Circle called on Congress to urgently pass legislation to regulate stablecoins, while not banning innovation in the crypto industry.

Stablecoins in the US. In April, congressmen proposed imposing a moratorium on stablecoins backed by cryptocurrencies. It is designed to protect the industry from a repeat of incidents similar to Terra’s UST collapse and the temporary loss of USDC’s peg to the dollar.

Later, lawmakers proposed taking away the Securities and Exchange Commission’s (SEC) oversight authority over stablecoins. This is stated in the new bill that focuses on stablecoins used for payments.

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Circle Director of Strategy and Policy in the European Union Patrick Hansen said that the adoption of the Markets in Crypto Assets law by the EU authorities would have a positive impact on the industry. The document was approved by the European Parliament on April 20.

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