Anchorage to Phase Out USDC, Agora USD Citing Risks, Stirring Fierce Backlash
Anchorage Digital, a federally chartered crypto bank, announced it will phase out support for USDC, AUSD, and USD0 stablecoins for institutional clients, prompting strong industry reactions. The bank cited its new “Stablecoin Safety Matrix,” which assesses stablecoins based on regulatory oversight and reserve management. USDC, the second-largest stablecoin, received a low rating due to perceived concentration risks in its issuer structure and a lack of substantive prudential oversight. Anchorage highlighted Circle’s holding of approximately 15% of USDC reserves in bank cash as a contributing factor. This decision comes amidst increasing competition in the stablecoin market, fueled by the potential passage of the GENIUS Act, which could significantly expand stablecoin adoption. Projections estimate the stablecoin market to grow to trillions in the next few years.
The move sparked immediate criticism. Agora’s founder, Nick Van Eck, accused Anchorage of misrepresenting facts about AUSD and failing to disclose its commercial interest in Global Dollar (USDG), a stablecoin in which Anchorage is a founding partner. Van Eck and others pointed out that AUSD is fully backed by treasuries and managed by a multi-regulated entity. Coinbase also criticized Anchorage’s assessment, calling it a poorly executed “hit piece.” Circle defended its “long-standing compliance record” and adherence to U.S. and EU regulatory standards, emphasizing USDC’s 100% backing by fiat reserves and robust liquidity. Despite the controversy, major players like BitGo and FalconX publicly stated their continued support for USDC and AUSD, highlighting the ongoing demand and confidence in these stablecoins. The incident underscores the evolving regulatory landscape and the increasing scrutiny surrounding stablecoin reserves and issuer structures. The differing opinions highlight the complexity of assessing risk and the potential for conflicts of interest in the rapidly developing stablecoin sector.
