- Circle is not the first company that has pointed out the possible downside of the SEC’s actions.
- The USDC records nearly half of its former market cap
- Coinbase also warned that more crypto firms will move overseas
A stablecoin issued by Circle, USDC’s market cap has faced a massive decline of nearly half over the past six months following a spike in bank crisis and a regulatory crackdown.
Circle’s Chief Executive Officer, Jeremy Allaire, attributes the recent decrease in the value of Circle’s Stablecoin USD coin to a crackdown on cryptocurrencies by the United States government. The failure of FTX, the current financial crisis, and the temporary de-pegging of USDC have all contributed to the emergence of remarks regarding the U.S. government’s intention to crack down on cryptocurrencies at a time when many types of cryptocurrency are the subject of intensive study.
During an interview with Bloomberg, Jeremy mentioned that the international community is concerned about the present state of the financial sector in the United States and the contentiousness of the regulatory climate in the United States. Jeremy also mentioned that the international world is concerned about the current political environment in the United States.
In March, the United States was experiencing a financial crisis that failed Silicon Valley Bank and Signature Bank. As a result of this crisis, the USDC was depegged for a brief period. One of the financial organizations that supported cryptocurrencies, Silicon Valley Bank, was closed down by regulatory authorities, taking $3.3 million worth of USDC reserves with it.
Circle assuaged the concerns of its customers following the failure of Silicon Valley Bank by assuring them that the company had the backing of investors who would assist in making up for the hole left by SVB. On the other hand, the swift response of the market resulted in the decoupling of USDC from the U.S. dollar.
USDC once boasted of a market cap of $56 billion at its peak and was right behind Tether issues stablecoin, USDT but with the recent banking crisis and the stablecoin’s depeg, the market for it has been cut nearly in half and is currently sitting at $30.7 billion.
Since the United States crackdown, Coinbase warned that the lack of regulatory clarity would result in a forced move of crypto companies to look for better opportunities outside of the U.S., and with the recent passing of the Markets Crypto-Assets Act (MiCA) by the European Parliament and the recent push for crypto adoption in Hong Kong, Jeremy Allaire believes in a short time, more crypto companies will make their way out of the United States crypto market.
The CEO of Circle believes that it is a critical moment in the United States for the future of the crypto market. It is up to Congress to decide to step up the Securities and Exchange Commission, led by Gary Gensler, has been on a mission to enforce strict crypto regulations since FTX collapse, which single-handedly created a tremor in the crypto market, with many crypto firms being exposed to it.
Conclusion
The Securities and Exchange Commission has threatened regulatory actions against several crypto firms and exchanges and has even shut down a few or had investigations into others.
The Head of the Commission has faced a lot of pushback from policymakers during an oversight hearing on digital assets. Apart from the pushback from policymakers, many crypto advocates have also expressed concern about the authority of the SEC and their Head.
