Investors have transferred $1.6 billion from USDC to USDT as US regulators shut down crypto firms. Reports suggest that the crypto market requires new decentralized stablecoins. The US authorities firmly grip users’ funds amidst regulatory scrutiny. BeINcrypto reports that Circle, issuers of USDC, froze assets worth $75,000 of users linked to Tornado Cash. The US government had accused Tornado Cash of money laundering. The reports say that Circle immobilized the money to oblige with the US legal regulations; this stance has drawn criticism from several crypto experts. The current set of events has unsettled both investors and the crypto market.
Investors exit USDC
BeINcrypto reports that USDT’s market cap experienced an increase from $1 billion to $67.43 billion across the five days following the Tornado Cash saga. On the other hand, USDC’s market cap slid over $500 million over the same five days. Reports suggest a 2.3% decline in USDC’s market cap, while that of USDT rose by about 2.4% in the same period. BeINcrypto cited Gabor Gurbac (strategy advisor at asset manager VanEck)’s tweet, “After the recent regulatory push in the US against crypto companies and tokens, I wouldn’t be surprised if institutions and larger players felt safer with their money outside the US.”
USDC has been under scrutiny for long
BeINcrypto reports that the US central government banned 81 USDC wallet addresses since its launch in September 2018. The wallets belonged to various crypto firms, individual traders, and groups. Reports say that Tether suffered a significant drawback in May when investors removed USDT worth $7 billion days after Terra’s downfall. Ego Haung, CEO of crypto derivative trading platform Deepcoin, told BeINcrypto that the crypto market is prone to seizure, and the investors need to find a new stablecoin source instead of safeguarding their funds against central authorities.