By Haslinda Amin, Rishaad Salamat and Suvashree Ghosh
April 26, 2023 at 7:55 AM GMT+4
A push by investors to “de-risk out of the US” amid banking system and regulatory challenges is contributing to the drop in the market value of stablecoin USD Coin, according to the chief executive of the token’s issuer. “We are seeing a huge amount of concern globally about the US banking system,” Jeremy Allaire, CEO of Circle Internet Financial Ltd., said in an interview on Bloomberg Television on Wednesday. “We are seeing concern about the regulatory environment in the US.”
USD Coin temporarily lost its $1 dollar market peg during the banking crisis this year but has since stabilized. However, the token’s market value has continued to fall and now stands at about $30.7 billion from a peak of more than $56 billion in June last year, CoinGecko data shows.
Stablecoins are key parts of the crypto sector where investors often park funds to use in trading. They are meant to hold a steady value, typically $1, and are often backed by reserves like cash and bonds. Regulators have stepped up scrutiny of stablecoins over concerns about the risks they can pose.