Circle Internet Financial CEO Jeremy Allaire has attributed the fall in the value of the company’s stablecoin, USD Coin (USDC), to a crackdown by U.S. regulators on the crypto industry, media reports said.
Speaking in an interview on Bloomberg Television on Wednesday, Allaire said that concerns about the regulatory environment in the U.S. and the country’s banking system were contributing to a decline in USDC’s market value. He also noted that investors were increasingly looking to “de-risk out of the U.S.”
USDC remains one of the most widely used stablecoins in the crypto sector, pegged to the U.S. dollar. However, according to data from The Block Research, the total supply of USDC in the market has fallen by around $10 billion since the beginning of the year to just over $30 billion. In comparison, rival stablecoin USDT has gained ground and now has a total supply of $82.5 billion.
Circle was hit earlier this year when it revealed that it had $3.3 billion in reserves stored with Silicon Valley Bank, which collapsed soon after. The episode caused USDC to briefly fall in value to as low as $0.88 before recovering a few days later.
The U.S. regulatory crackdown on the crypto industry has also led to the closure of two crypto-friendly banks, Silvergate Bank and Signature Bank, leaving few banking options for startups.
In response to these challenges, Circle has applied for a French crypto asset license to expand its European presence. Allaire’s comments come amid increased regulatory scrutiny of the crypto in the U.S., with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) taking steps to tighten oversight of the sector. Some industry experts have warned that the regulatory crackdown could stifle innovation and push crypto firms to relocate to more crypto-friendly jurisdictions.
