Anchorage Digital, a crypto custodian and federally chartered financial institution, stated it can begin phasing out and direct institutional shoppers to transform USDC
and different stablecoins into rival token World Greenback (USDG) in a sweeping transfer that drew criticism from trade gamers.
The agency launched a “Stablecoin Security Matrix” that ranks stablecoins primarily based on regulatory oversight and reserve asset administration on Tuesday.
Circle-issued USDC, which is the second-largest stablecoin with a $61 billion provide and is well-liked amongst establishments, was deemed not appropriate beneath Anchorage’s safety framework. Two different, smaller tokens, Agora USD (AUSD) and Ordinary USD (USD0), had been additionally slated for removing. Stablecoins are cryptocurrencies with their costs tied to an exterior asset, predominantly to the U.S. greenback.
“Following our Stablecoin Safety Matrix, USDC, AUSD, and USD0 no longer satisfy Anchorage Digital’s internal criteria for long-term resilience,” Rachel Anderika, head of world operations at Anchorage, stated in a assertion justifying the choice. “Particularly, we recognized elevated focus dangers related to their issuer constructions — one thing we consider establishments ought to fastidiously consider.”
“Anchorage Digital is targeted on supporting stablecoins that display sturdy transparency, independence, safety, and alignment with future regulatory expectations,” she added.
Stablecoin race heats up
The move came at a time when competition in the stablecoin market is heating up with global banks, payments firms and crypto companies jockeying for position in the rapidly-growing sector.
The U.S. Senate recently passed the GENIUS Act that aims to enact clear rules for the asset class and issuers, which could open the gates for broader adoption. On Friday, White House crypto czar David Sacks suggested that the bill may become law as soon as next month, pending passage in the House of Representatives.
Reports by Citi and Standard Chartered reports projected the asset class to grow from the current $250 billion to trillions through the next few years. Circle (CRCL), the company behind the USDC token, recently went public and skyrocketed in valuation.
Anchorage gave USDC a score of 2 out of 5 for regulatory oversight and reserve management. The report said there was “no substantive prudential oversight” and that Circle had a large — about 15% — amount of its reserves held in cash at banks. Notably, USDC depegged temporarily in March 2023 when partner bank Silicon Valley Bank went under. Tether’s USDT, the world’s largest stablecoin, had a higher rating with Anchorage pointing to it being regulated in El Salvador.
S&P Ratings rated USDC “sturdy,” its second-best rating in its stablecoin stability assessment. Bluechip, a crypto-native stablecoin rating firm, gave USDC a B+ rating in its economic safety rating.
Industry leaders push back
Anchorage’s decision met with fierce pushback.
Nick Van Eck, whose firm Agora issues AUSD, accused Anchorage of misrepresenting facts about his stablecoin and failing to disclose its commercial interest in Global Dollar. USDG is issued by Paxos and is backed by a consortium of firms that share the income from the reserve assets backing the token. Anchorage is a founding partner in that consortium.
“If Anchorage had simply delisted USDC and AUSD to prioritize the stablecoins that they’ve an financial curiosity in, I’d perceive it as a enterprise choice,” he said in an X post. “However making an attempt to delegitimize AUSD and USDC for ‘safety issues,’ whereas knowingly publishing false data, is unserious and weird.”
“By no means seen such an apparent hit piece be so poorly executed,” said Viktor Bunin, protocol specialist at digital asset exchange Coinbase. Coinbase jointly launched USDC with Circle in 2018, and shared revenue from the reserve assets backing the token.
Jan Van Eck, father of Nick Van Eck and CEO of asset manager Van Eck, which manages AUSD’s backing assets, also questioned the risk assessment.
“For those who want fun, try this ‘security’ matrix earlier than Anchorage pulls it down. In keeping with the matrix, Circle’s USDC (world’s second largest stablecoin) and AUSD (backed 100% by treasuries) have reserve points,” he posted on X. “Oh, and by the way in which, AUSD’s reserve supervisor is regulated by umpteen completely different regulators.”
Circle, in a statement sent to CoinDesk, defended the firm’s “long-standing compliance report” and “sturdy fame as an trade chief.”
“We adjust to the prevailing U.S. regulatory requirements that apply to main fintech and funds corporations, and we had been the primary stablecoin issuer to realize full compliance with the European Union’s landmark crypto regulation,” a Circle spokesperson said. “USDC is 100% backed by fiat-denominated reserves and has sturdy major liquidity via a well-developed community of banks, representing what we view as the very best ranges of transparency, security, and operational resiliency in our trade.”
Support came for Circle and Agora outside of the two stablecoins’ camp.
“For the report, BitGo will not be dropping USDC assist,” stated Chen Fang, chief income officer at crypto custodian BitGo.
“Agora and Circle are long-standing companions of ours, and our clients depend on protected, clear rails for USD settlement,” said Joshua Lim, co-head of markets at crypto prime broker FalconX, adding that his company “is able to assist shoppers utilizing AUSD and USDC.”
