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The CEO of Circle believes that the banking crisis and regulatory issues in the US crypto industry are the main factors that have led to the decline in the market capitalization of USDC.
Circle-issued USDC stablecoinnow ranks second in terms of market capitalization after the stablecoin Tether (USDT). In the summer of 2022, the total value of USDC reached $56 billion, but as of April 26, 2023, it has roughly halved to $30.7 billion.
“We are seeing great concern around the world.about the US banking system. We see concerns about the regulatory environment in the US,” said Circle CEO Jeremy Allaire.
Circle's problems began after the collapse of SiliconValley Bank, where the company held about $3.3 billion worth of assets. Under ideal conditions, the stablecoin should be pegged to the dollar at a ratio of 1 to 1. However, after the collapse of the bank, USDC became cheaper for more than a day, falling to $0.85 at some point.
By mid-March, the situation had stabilized,when Circle got their money back and moved the assets to other banks. USDC returned the lost peg to the dollar. However, investor confidence was still undermined. At the end of March, Circle announced a reduction in the number of USDC stablecoins in circulation.</p>