USDC Market Cap Slides By $10B Since Tornado Cash Bans
Investor Interest in USDC Wanes as Competing Stablecoins Gain Market Share
By: Tarang Khaitan •DeFi News
Centre Consortium’s USDC, crypto’s second-largest stablecoin by market capitalization, is steadily losing market share.
The circulating supply of USDC has fallen by almost 20% from $53.6B on Aug. 8 to $43.2B on Oct. 27. Meanwhile, other leading stablecoins like Tether’s USDT and Binance’s BUSD expanded by $1.82B and $3.41B respectively.
USDC seems to have fallen out of favor with investors after Centre’s August move to ban 38 addresses which had interacted with the Tornado Cash protocol. The U.S. Department of the Treasury levied sanctions against the privacy mixer on Aug. 8 and forbade US-based entities from interacting with the protocol.
In contrast, Tether said that it will not pre-emptively ban any sanctioned addresses unless specifically asked to do so by law enforcement agencies. The move was widely praised by the community. In October, Tether further bolstered confidence after it said that it no longer holds any commercial paper in its reserves.
In September, Binance, the world’s largest crypto exchange, announced that it would delist USDC, USDP, and TUSD, and convert users’ dollar balances into its own BUSD stablecoin, which could account for the rise in BUSD supply.
Centre’s decision to freeze assets held in the sanctioned addresses was widely decried by the crypto community and it looks like USDC holders have been redeeming their tokens. From Oct. 13 to Oct. 20, the latest week for which data is available, net issuance of USDC stood at -$1.7B.
Impact On MakerDAO
MakerDAO founder Rune Christensen has been aggressively trying to avert a scenario where Centre either freezes the USDC held in Maker’s Peg Stability Module (PSM) or adds it to the list of banned addresses. According to Daistats, 56% of the DAI in circulation are backed by USDC collateral.
On Aug.10, the Maker team floated contingency plans in the wake of the Tornado sanctions. However, this has created a rift within the MakerDAO community and has resulted in MakerDAO possibly being restructured into smaller MetaDAOs.
Christensen Under Fire After MakerDAO Members Vote for His Reorganization Plan
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On Oct. 26, Christensen’s restructuring plan was approved by the community.
MakerDAO’s MKR token is down 12% since Aug. 10.
MKR Price. Source: The Defiant Terminal