| Reporter Leo Schwartz here, filling in for Alyson.
When the dust settled from the Silicon Valley Bank failure in March, one depositor stood to gain the most from the government’s bailout: Circle, the crypto giant founded in 2013 by Jeremy Allaire. Circle had $3.3 billion trapped at SVB, a stunning total that represented 8% of the reserves for its dollar-backed stablecoin, USDC, and kicked off a panic that saw Circle lose its footing. Six months later, it still hasn’t recovered.
The so-called Crypto Winter lingers, but stablecoins still represent the best potential to bridge the worlds of blockchain and traditional finance. Lawmakers continue to clamor for stablecoin legislation, established companies like PayPal are dipping their toes into the competition, and boosters like Allaire claim that products such as USDC will remake the rails of global finance.
Despite Allaire’s optimism, the past months have not been kind to his dream of a payment revolution, with Circle losing market share to its chief rival, the offshore and unregulated Tether. I spoke with more than two dozen executives, competitors, regulators, and former employees to find out why Circle is losing the stablecoin wars, delving into the 10-year history of the company, its rocky partnership with Coinbase, and its own dubious relationship with regulators.
Allaire’s story is the classic tale of a tech founder trying to will his vision into existence through the “move fast and break things” approach—a strategy that may work well for social media companies, but proved disastrous for a bank-like firm with over $40 billion of assets under management. I provide new details on the fateful weekend in March that saw USDC depeg, and why traders are still wary to put their trust back in the company.
You can read the full story here. |
