Regulatory uncertainty and banking crisis could push investors outside US: Circle CEO

Regulatory uncertainty and banking crisis could push investors outside US: Circle CEO

Jeremy Allaire – CEO of Circle Internet Financial Ltd. – argued that US investors may soon move due to the lack of adequate regulations and the growing banking crisis.

The collapse of Silicon Valley Bank (SVB) in March caused serious problems for the stablecoin issuer. USDC was decoupled from its fixed valuation of $1 to as high as $0.87 after Circle disclosed a massive $3.3 billion commitment to the financial institution. However, it has managed the issue and ensured that investors are not affected.

“Critical moment” in the USA

In a recent interview for Bloomberg, Allairerecommendedthat America's regulatory challenges and harrowing banking system could prompt investors to "take risks out of the US":

"We see great concern globally about the U.S. banking system. We are concerned about the regulatory environment in the U.S."

Jeremy Allaire, CNBC

The numerous disasters over the past year, including the Terra crash and the FTX meltdown, have left a dark mark on the entire cryptocurrency field, while many believe that these events were due to the lack of proper monitoring.

Allaire believes the US government should act quickly, highlighting recent progress made by the European Union, Singapore and Hong Kong:

“It’s a critical moment here in the United States, and as I like to say, it’s really a moment for Congress to step up.”

Another well-known person from the crypto industry who supports this thesis is the CEO of Coinbase – Brian Armstrong. He recentlyindicatedthat its exchange could go abroad unless American watchdogs impose relevant rules on the digital assets sector.

USDC and SVB

In addition to the regulatory hurdles, Circle's CEO mentioned the banking problems of the world's strongest economy and the impact on investors and other companies.

Domestic authorities closed three leading banks last month: Silvergate Capital, Signature Bank and Silicon Valley Bank. They all served multiple cryptocurrency customers and caused them significant losses.

First Republic has also been struggling, and despite government intervention, its first quarter earnings report was weak, pushing the stock down over 50% yesterday.

However, circle hada whopping $3.3 billion commitment to SVB, causing panic among investors and causing USDC to fall well below its $1 price target.

Despite the issues, the Boston-based organization assured that it is continuing the normal course of its operations and stated that customers will not be affected:

“Circle will stand behind USDC, as required by law and pursuant to the Transfer of Money of Stored Value Regulation, and cover any shortfalls with corporate resources, including external capital where appropriate.”

The stablecoin restored its $1 valuation in the following days and has not seen any fluctuations since then. Nonetheless, the market cap took a major hit, plummeting from over $43 billion in March to around $30 billion currently.

Featured image courtesy of AIR

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