The Securities and Exchange Commission (SEC) of the United States has been cracking down on the cryptocurrency industry. According to Circle CEO Jeremy Allaire, the US authorities’ crackdown has been a key reason for the decreasing market value of its stablecoin, USDC. He made these allegations in a recent interview.
This harsh treatment of the industry began after the collapse of one of the biggest exchanges, FTX. FTX collapsed in early November 2022. The collapse of FTX shocked the volatile cryptocurrency market, which lost billions at the moment and fell below a $1 trillion valuation. On November 11, the business filed for bankruptcy, and CEO Bankman-Fried resigned. Since then, the SEC has issued notices and taken strong action against the industry.
Many crypto-friendly banks have also failed recently. Banks including Signature Bank, Silvergate and SIllicon Valley Bank contributed to the financial crisis of the U.S. The chair of the SEC, Gary Gelsner has blamed the crypto market for these failures. The negative stance of the chair towards the crypto industry is very clear.
In the interview, Allaire noted that there is a “huge amount of concern globally about the U.S. banking system,” and the “regulatory environment in the U.S.” The USDC was devalued in March as a direct result of the financial crisis in the United States. Circle’s $3.3 billion in USDC reserves got stuck with Silicon Valley Bank. Circle had told its clients at the time that it had the backing of investors to bridge the gap. However, the market responded fast to the news, and USDC devalued from the US dollar.
USDC formerly had a market valuation of $56 billion at its height, trailing only Tether-issued USDT. However, the stablecoin’s market valuation has been practically reduced in half, now standing at $30.7 billion following the financial crisis and the depreciation of the USDC. At the time of writing, the trading value of the currency is $0.999735.
Circle is not the only one calling out the regulatory body for its actions against the crypto industry. Another exchange company, Coinbase has filed a petition against the SEC to bring out proper rules and regulations for the industry. If no action is taken, the firm shall relocate. Chamath Palihapitiya, a tech investor also claimed that ‘crypto in America is dead’ due to the conditions.
Not only that, Commodity Futures Trading Commission (CFTC) has asked the SEC to work together to set up rules and regulations for the industry. Crypto also has lawmakers such as Rep. French Hill vouching for it. Gensler also had to appear in front of Congress to defend his action.
