The creator of the second largest stablecoin, USDC, with a market capitalization of approximately $24.7 billion, announced that it will only support trading institutional accounts.
In a strategic move to review its customer relationships, Circle, a leading and regulated issuer of stablecoins, informed its individual account holders that they will not receive services at the end of this month. Circle wrote an email to its individual customers informing them to redeem their coins before November 30, as only institutional and business account holders will be served. The company highlighted that the recent action to close individual accounts is consistent with its specific terms in the applicable legal agreement.
As a result, account holders without active balances are not required to take any further action, but can still contact customer support directly for further assistance. According to the Circle email shared by an X platform user, Evanss6, the company could be cracking down on individual accounts due to regulatory pressure as it complies with the SEC.
Circle cracking down? pic.twitter.com/KwvX9sz0xp
—Evans6 (@Evan_ss6) October 31, 2023
Without a formal explanation as to why individual Circle accounts will be closed at the end of this month, the room for speculation was wide. For example, popular analyst and cryptocurrency enthusiast Adam Cochran suggested that the stablecoin issuer is acting to prevent the draining of its reserves from people suspected of engaging in money laundering activities.
“Honestly, my personal bet is that the TUSD/USDT rotation into USDC that has been depleting its reserves is coming from a network of consumer accounts, which is why it cannot be pinpointed. KYC mules aren’t exactly a new concept, so I wouldn’t be surprised if that was the strategic trade-off here,” Cochran noted.
A closer look at Circle and the stablecoin industry
The stablecoin industry has been significantly infiltrated by institutional investors looking to venture into global markets through blockchain technology. Circle, which has partnered with BlackRock Inc (NYSE: BLK) and Bank of New York Mellon Corporation (NYSE: BK), has become a globally recognized stablecoin issuer with different products. However, the company has stipulated that its products are intended for DeFi applications and institutions looking to transfer money around the world seamlessly.
At the time of this report, Circle offered several products, including USDC, EURC, cross-chain transfer protocol, programmable wallets, and a smart contract platform. The leading product was USDC with a market capitalization of approximately $25 billion and around 1.8 million holders facilitating a 24-hour trading volume of approximately $4 billion. Last year, Circle issued $124.9 billion and its customers redeemed $143.7 billion.
As for EURC, it is currently available on the ethereum, Avalanche and Stellar networks. Notably, EURC had a total market capitalization of approximately €50.9 million. Meanwhile, Circle continues to face intense competition from Tether (USDT) as more countries prepare to launch and deploy their respective CBDCs.
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