Gabor Gurbacs, the strategic adviser to VanEck, said leading players and institutions might feel secure moving their money outside the US. Iakov Levin, the CEO of Midas Investments, stated the case of Tornado Cash shows that no one is immune from the influence of regulators.

Investors have moved around USD 1.6 billion worth of USDC to compete with USDT amid regulatory repression against crypto firms.

When USDC issuers Circle froze 75,000 USDC after August 1st, a significant amount went into USDT. Those funds belong to users of Tornado Cash, the cryptocurrency mixer the US government sanctioned for allegedly laundering money.

Although Circle said it froze that money to comply with US sanctions law, the decision drew criticism among crypto fundamentalists. These expressed concern that corporate intrusion might erode the cryptocurrency ethos of privacy and decentralization.

Those Investing in USDC Flee to USDT

The overall market capitalization of the Tether stablecoin USDT rose by about USD 1 billion to USD 67.43 billion. That happened within the five days after Circle froze the wallet addresses related to Tornado Cash.

The data shows that the market capitalization of USDC rose by over USD 500 million during that period. That suggests that the outstanding balance in transfers to USDT may have another origin.

Over the last month, the market capitalization of USDC has dropped by 2.3% (USD 1.3 billion) to USD 53.5 billion. In contrast, it rose by 2.4% (USD 1.57 billion) during the same period.

According to Gabor Gurbacs, strategic adviser to asset manager VanEck, leading players and institutions might feel secure with their money outside the US. That is especially true after the recent regulatory repression against crypto companies and tokens.

Regulators have often accused Hong Kong-based Tether of a lack of transparency in holdings to support its USDT stablecoin. Meanwhile, Center, the US consortium behind USDC, has received criticism for contacting government authorities.

After launching USDC in September 2018, Center has banned 81 wallet addresses in compliance with US government sanctions against cryptocurrencies.

Tether ran into trouble when investors withdrew around USD 7 billion within days of the Terra crash.

The Crypto Market Needs Truly Decentralized Stablecoins

Ego Huang, CEO of cryptocurrency exchange DeepCoin, recently said the close dependence on the US government regulatory regime hampers USDC.

That makes it an easy prey of US regulators, as investors are not sentimental about any stablecoin issuer. They only seek to secure their funds and avoid the intervention of centralized authorities.

In addition, Huang said the lack of defined regulation has been complicated, regardless of how Circle turns the tables to prevent a cash outflow. Therefore, investors will still need insurance or a safety net, which they think they can find in USDT.

Jeremy Allaire, the CEO of Circle, promised to commit to addressing the privacy concerns plaguing the company.

The executive said that the regulatory intervention of Tornado Cash was full of flaws. Allaire stated that he would intensify the compliance with the policies to protect user privacy by following basic cryptocurrency principles.

Iakov Levin, the CEO of crypto investment platform Midas Investments, said the case of Tornado Cash shows that no one is immune from regulations.

The founder of Midas Investment explained that any protocol might find itself in the place of Tornado Cash. He considers that US regulators will do anything to interfere with any part of the developing decentralized economy.

By Alexander Salazar

LEAVE A REPLY

Please enter your comment!
Please enter your name here