Circle CEO Blames US Crypto Crackdown For Plummeting USDC Market Cap

Circle CEO Jeremy Allaire has attributed the decline in the market capitalization of its stablecoin, USD Coin (USDC), to the regulatory crackdown on cryptocurrencies in the United States. USDC’s market cap has dropped nearly by half over the past six months due to a combination of factors, including the banking crisis and regulatory scrutiny.

In a recent interview with Bloomberg TV, Allaire pointed to the “huge amount of concern globally about the US banking system” and the “regulatory environment in the US” as factors driving the decline in USDC’s market cap. He also cited the lack of regulatory clarity in the US, which he believes is prompting crypto companies to look for opportunities overseas.

In March, something happened that caused USDC to not be worth the same as the US dollar anymore. Making special computer things for mining Bitcoin was difficult, which led to certain consequences. Additionally, a bank assisting with crypto money had to discontinue its services, further exacerbating the situation. Even though they said everything was okay, people got worried, and the value of USDC changed.

Source: CoinMarketCap

At its peak, USDC had a market cap of $56 billion, second only to Tether-issued USDT. However, since the banking crisis and UDC’s depeg, the stablecoin’s market cap has been cut nearly in half, currently at $30.7 billion.

Regulatory Scrutiny And Lack Of Clarity To Blame

US regulators’ regulatory scrutiny of the cryptocurrency industry has partly driven the decline in USDC’s market cap. After the FTX exchange failed, the United States Securities and Exchange Commission (SEC) became active. The SEC now warns several crypto platforms and exchanges that they might face regulation.

Many crypto proponents and policymakers have questioned the authority of the SEC and its chairman, Gary Gensler. Coinbase has cautioned that unclear regulations in the US could push crypto firms to explore opportunities abroad. This could result in a loss of investment and innovation for the United States.

Related Reading | Mastercard Web3 Verification Solution: Combatting Fraudulent Users

The European Parliament passing of the Markets in Crypto-Assets Act (MiCA) and Hong Kong’s crypto adoption is concerning Allaire. He thinks the US could fall behind in the global crypto competition. He called on Congress to “step up” and take action to clarify the regulatory environment for cryptocurrencies in the US.

USDC’s market cap is falling because of the banking crisis, regulations, and unclear rules in the US. Allaire wants Congress to make a clear rulebook for cryptocurrencies before companies move overseas.

The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing

Comments (No)

Leave a Reply