A shaky American financial market helped lower the value of USD Coin, according to Circle’s CEO.
“We are seeing a huge amount of concern globally about the U.S. banking system,” Jeremy Allaire said in an interview with Bloomberg Television Wednesday (April 26). “We are seeing concern about the regulatory environment in the U.S.”
Circle’s USD Coin temporarily lost its dollar peg during March’s banking crisis over concerns the crypto company had funds at Silicon Valley Bank (SVB) when it was shut down and taken over by the Federal Deposit Insurance Corporation (FDIC).
The company had pledged it would recoup $3.3 billion in reserves held at SVB and cover any possible shortfall. However, the value of USD Coin fell to 87 cents during the weekend of the SVB collapse.
While the token has since stabilized, the Bloomberg report noted its overall market capitalization has dropped by nearly half since its 2022 peak of $56 billion.
Meanwhile, the broader crypto industry is facing a crackdown by the government, with many companies in the sector — Circle included — calling for clearer regulations.
“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,” Allaire said, per the report.
He argued questions are being raised about the competitiveness of the U.S. dollar as blockchain technology and internet-based currencies continue to evolve.
Places like Hong Kong, Singapore, the European Union and the Middle East are all developing crypto regulations, but “the U.S. is behind right now,” said Allaire in the report.
Last week saw the EU become one of the first jurisdictions worldwide to “introduce a comprehensive set of rules surrounding crypto assets and their use,” as PYMNTS reported.
Lawmakers voted 517-38 to greenlight a crypto licensing framework, Markets in Crypto-Assets (MiCA), opening the door for tailored regulations for the crypto industry, “centered around protecting users and supporting innovation, into one of the world’s largest and most mature market economies.”
In the U.S., meanwhile, crypto’s future “remains as uncertain as ever,” PYMNTS wrote last week, as the House Financial Services Committee met to discuss stablecoins in a hearing that “underscored that a sizable vacuum still exists at the federal level when it comes to the prospect of comprehensive legislation around digital assets, no matter their use case.”
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