The current crisis and uncertainty around the global banking system could push the cryptocurrency market into a grayer area in terms of regulation, the CEO of Circle believes.
Jeremy Allaire, CEO of USD Coin (USDC) issuer Circle, took to Twitter on March 23 to share his thoughts on market dynamics after the collapse of Silicon Valley Bank (SVB).
In the Twitter thread, Allaire highlighted "deep market anxiety" about overall exposure to the US financial system and the risk of a full-scale US banking system failure.
The CEO of Circle emphasized that the current banking crisis has far more potential to harm crypto businesses regulated in the United States than those regulated in other jurisdictions, stating:
"Ironically, the players who have had the strongest position with US regulation and US banking system integration are considered 'unsafe', with fears that assets could be stranded."
Allaire went on to say that the SVB contagion could potentially push the crypto market into a less regulated area, urging US lawmakers to think about what happens next. Addressing the White House and the US Congress, the CEO argued that there has not been a situation in the last 10 years in which the US so urgently needs a "clear, coherent and pragmatic policy".
“We are at grave risk of an entire strategic technological field slipping away from American leadership,” Allaire warned, adding:
“Right now, market participants are shifting to unmonitored platforms, fully opaque banking and risk exposures, and histories of lax financial risk/integrity controls. This doesn't end well."
Allaire stated that Circle will continue to operate within a regulatory perimeter and will continue to work to add "more transit and settlement banking partners." He also stressed that USDC "hasn't missed a beat" and has never stopped issuing or redeeming USDC for $1, even "during the stress test of the last few weeks."
As Cointelegraph previously reported, Circle has experienced significant problems due to its exposure to the collapsed bank SVB, with its USDC Stablecoin Briefly Loses Its 1:1 Peg with the US dollar. Subsequently, the stablecoin rebounded in the middle of Circle announcing Cross River as a new banking partner and expand ties with BNY Mellon.
Related: Tether CTO at USDC depeg: 'Bitcoin maxis was right all along' | PBW 2023
Allaire's comments have echoed some observations in the cryptocurrency community, with some cryptocurrency enthusiasts expressing puzzlement over how US-regulated companies like Circle were affected by the crisis, while competition "chads" as Tether (USDT) have experienced zero to no issues so far.
USDC vs. USDT
a short story pic.twitter.com/LyuLgzyNqK— BallenaPanda (@BallenaPanda) March 15, 2023
As previously reported, Tether was one of the first companies to deny exposure to SVB and other troubled US banks in mid-March. According to Tether CTO Paolo Ardoino, the stablecoin issuer has no exposure to SVB, Signature Bank, or Silvergate.
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