- Amidst a regulatory onslaught and financial crisis, USDC’s market cap has almost been cut in half during the past six months.
- Since the FTX meltdown fiasco, Gary Gensler’s Securities and Exchange Commission has been aggressively enforcing the law.
In a Bloomberg TV interview, Allaire highlighted concerns about the US financial system and regulatory climate amid the recent collapse of the FTX exchange, a banking downturn, and the temporary depegging of USDC. According to Allaire, a decline in the market value of USDC is being attributed to investors’ intention to “de-risk out of the U.S.”
It is important to note that Silvergate Bank suspended its cryptocurrency services earlier this year, which had an impact on many crypto businesses, including Circle.
As an immediate consequence of the U.S. banking crisis, USDC depegged in March. Circle’s USDC reserves of $3.3 billion remained in Silicon Valley Bank, one of the three crypto-friendly banks that were closed by regulators. The stablecoin issuer was compelled to transfer its USDC reserve deposits out of Silvergate Bank due to the struggling bank’s ongoing operations.
The market reacted fast to the announcement, and USDC depegged from the US dollar, despite Circle’s assurances to its users that it had the support of investors to replace the disparity at that point.
There is no doubt that in the wake of the failure of the FTX exchange and the market crisis of last year, the US crypto business has been dealing with a strict regulatory crackdown.
Investors suffered large losses as a result of these incidents, which also raised public awareness of the dangers posed by digital assets.
However, the credit crisis did witness a silver lining——and that was cryptocurrency markets delivering increased growth, with Bitcoin trading worth being one of the largest gainers since Silvergate shuttered.
CEO Allaire has appealed to American lawmakers to take action and establish clear rules for the cryptocurrency space in light of the current circumstances. He made that claim.
“The US is currently falling behind on crypto rules, while the Middle East, Hong Kong, Singapore, and the European Union are making progress.”
Allaire also emphasised worries about the US dollar’s ability to compete in the face of the emergence of blockchain technology and digital currencies.