US Crypto Regulation Blames USDC Market Cap Decline
In the past six months, governmental crackdowns and the banking crisis have caused the market cap of USDC, a stable coin made by Circle, to drop by almost half.
Circle CEO Jeremy Allaire says that the US government’s crackdown on cryptocurrencies is a big reason why the value of its stable coin, USD Coin, has been going down.
After the FTX exchange collapse, a financial crisis, and USDC’s depegging, Circle’s chief commented on the U.S. crackdown. In an interview with Bloomberg TV, Allaire said there is a “huge amount of concern globally about the U.S. banking system” and the “regulatory environment in the U.S.”
The U.S. banking problem caused USDC to stop being tied to the dollar in March. The $3.3 billion in USDC reserves that Circle had were stuck with Silicon Valley Bank, which was one of the three banks that were shut down by officials because they were friendly to crypto. At the time, Circle told its customers that it had the support of investors to make up the difference. However, the market responded quickly to the news, and USDC stopped being tied to the U.S. dollar.
At its peak, USDC had a market cap of $56 billion and was right behind USDT, which was made by Tether. But since the banking crisis and the depeg of USDC, the stablecoin’s market cap has dropped by almost half and is now at $30.7 billion.
Coinbase also warned that crypto firms may seek opportunities elsewhere due to regulatory uncertainty. Allaire thinks the U.S. would fall behind after the European Parliament passed the Markets in Crypto-Assets Act (MiCA) and Hong Kong pushed for approval.
“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 crash, the U.S. Securities and Exchange Commission, led by Gary Gensler, has been on a crackdown. The SEC has warned several crypto sites and exchanges that they could face legal action.
During the oversight meeting on digital assets, policymakers had a lot to say to Gensler. Policymakers aren’t the only ones who have questioned SEC and Gensler’s power. Many crypto supporters have also done so.
