Circle CEO Blames Regulators, Banking Crisis For USD Coin Slump: 'Moment For Congress To Step Up'

The decline in the market value of stablecoin USD Coin USDC/USD can be attributed to a growing trend of investors looking to "de-risk out of the U.S." amid concerns about the country’s banking sector and regulatory challenges, according to Circle CEO.

What Happened: Jeremy Allaire, the CEO of Circle Internet Financial Ltd, the issuer of USD Coin, on Tuesday told Bloomberg that there has been significant global concern about the US banking system and regulatory environment, which has caused investors to seek alternative options.

USD Coin lost its $1 dollar market peg during the banking crisis earlier this year, causing its overall market capitalization to decline to $30.7 billion, a significant fall from its peak of over $56 billion in 2022.

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Why It Matters: The U.S. has seen a regulatory crackdown on crypto firms following the collapse of the FTX exchange and a deep market rout last year, leading to the Securities and Exchange Commission, stating that most tokens are unregistered securities. 

"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 told Bloomberg.

He noted that countries like the European Union, Hong Kong, Singapore and the Middle East are making progress on crypto rules, while the U.S. is lagging behind. Allaire views this as a concerning trend, believing that the country needs to take action to keep up with the rest of the world.

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