The prolonged crisis and instability surrounding the global banking system might drive the bitcoin industry into a grayer regulatory region, according to the CEO of Circle.
The CEO of the Dollar Coin issuer Circle, Jeremy Allaire, came to Twitter on March 23 to express his thoughts on the market dynamics after the Silicon Valley Bank (SVB) collapse.
Allaire noted in his Twitter thread the “deep market fear” of broad exposure to the U.S. financial system and the danger of a large-scale U.S. banking system meltdown.
“Ironically, the players who have had the strongest position with U.S. regulation and U.S. banking system integration, are considered ‘unsafe’, with fears that assets could be stranded.”
Allaire went on to add that the SVB virus might force the crypto industry to a less regulated location, encouraging U.S. authorities to consider the future.
In a speech to the U.S. White House and U.S. Congress, the CEO claimed that there has never been a more pressing need for a “clear, comprehensive, and pragmatic policy” in the last decade.
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.”
“We are in grave danger of losing US leadership in an entire strategic technology arena,” Allaire stated. In addition, he emphasized that USDC “has never skipped a beat” and has never failed to redeem or convert USDC to $1, even “under the stress test of the last week.” Adding that:
“Right now, market participants are shifting into platforms with no oversight, totally opaque bank and risk exposures, and histories of lax financial risk/integrity controls. This doesn’t end well.”
As previously reported, the USDC stablecoin briefly lost its 1:1 peg with the U.S. dollar due to Circle’s exposure to the failed SVB bank. After Circle announced Cross River as a new financial partner and the expansion of connections with BNY Mellon, the stablecoin was repealed.
Some crypto enthusiasts have expressed confusion over how U.S.-regulated firms such as Circle were impacted by the crisis, whereas competing “chads” such as Tether have thus far encountered zero to minimal problems.
Tether was one of the first companies to deny exposure to SVB and other troubled U.S. banks in mid-March, as previously reported.
According to Paolo Ardoino, chief technical officer of Tether, the stablecoin issuer does not have any exposure to SVB, Signature Bank, or Silvergate.