Circle to Discontinue Support for Legacy Consumer Accounts
USDC stablecoin issuer, Circle, announced on Tuesday that it will no longer support legacy consumer accounts. The USD Coin token is a stablecoin backed by the US dollar, with Circle holding $1 in reserves for each of the $25 billion worth of tokens in circulation. While USDC is the second most popular dollar-backed stablecoin after Tether (USDT), Circle will now only create new accounts for institutional traders and fintech firms.
Closure of Individual Retail Customer Accounts
Individual retail customers will no longer be able to create new accounts with Circle and will need to mint USDC through exchanges or brokerages instead. However, existing Circle Mint accounts are still available for institutional traders and other businesses. It should be noted that Circle hasn’t offered consumer accounts for several years now.
Circle’s Circle Mint Program
The Circle Mint program was launched by the stablecoin issuer in February 2022. It aimed to become a leading platform for payments and treasury activity. At that time, USDC’s market cap stood at around $53 billion, but it later reached an all-time high of $56 billion in June 2022.
The SVB Reserves Scare
In March 2023, Circle faced a significant setback when it was revealed that over $3 billion of its reserves were held in accounts at Silicon Valley Bank (SVB). Following the bank’s closure due to regulatory issues, confidence in USDC dropped as its price hit an all-time low of $0.87. This incident led to a decline in USDC’s market cap as investors redeemed more tokens during the bear market.
Impact on USDC Market Cap
Despite efforts to expand its user base in Latin America and Coinbase’s investment in Circle, USDC’s market cap has continued to decrease. The stablecoin was once seen as a potential rival to USDT but has struggled to regain its footing since the SVB reserves incident.
Hot Take: Circle Shifts Focus Away from Individual Retail Customers
Circle’s decision to discontinue support for legacy consumer accounts signals a shift in focus towards institutional traders and fintech firms. This move reflects the changing landscape of the stablecoin market and highlights the challenges faced by USDC in maintaining its market cap and user base. While Circle Mint accounts remain available, individual retail customers will now have to rely on exchanges or brokerages to mint USDC. The impact of this decision on the stablecoin’s future remains to be seen.
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