On Tuesday, February 20, 2024, Circle, the second largest player in the stablecoin market, announced that it has decided to terminate USDC support on the Tron blockchain. This decision raised concerns in the cryptocurrency market and especially among altcoin investors. So what lies behind this sudden decision? Why is Circle leaving Tron? What consequences will this development have for USDC and Tron?
Circle cited “risk management” in altcoin decision
Circle, the stablecoin operator behind USDC, one of the second largest altcoin projects, announced on Tuesday, February 20, that it is ending support for the USDC stablecoin on the Tron Blockchain. However, this will not be a sudden end, but a gradual transition. Circle added that it will make it easier for Circle Mint customers to transfer USDC to other blockchains by February 2025.
The stablecoin operator stated in its blog post that the decision to stop USDC issuance on the Tron Blockchain stems from a comprehensive risk management framework that evaluates the suitability of all blockchains for stablecoins. This action is part of USDC’s ongoing commitments to maintain its credibility, transparency and security. Additionally, this move is in line with Circle’s efforts to ensure the security and integrity of its stablecoin. It is worth noting that TRX, the token associated with the Tron Blockchain, has been involved in fraud allegations.
TRON claims: What happened?
cryptokoin.com As we reported last year, the Securities and Exchange Commission filed a lawsuit against TRX founder Sun and his companies, alleging market manipulation to inflate the token’s trading activity. Sun denied these allegations and stated that the lawsuit lacked merit. However, stablecoin operator Circle also added:
We remain committed to growing USDC. By continuing to expand USDC’s reach to additional blockchains, we will deliver the broadest reach, broadest developer selection, and most secure user experience of any dollar stablecoin in the world.
TRON has more USDT than USDC
According to data from DefiLlama, the total market cap of stablecoins on the Tron network currently stands at $51.5 billion, with the majority of this attributed to USDT, the largest stablecoin in the crypto market. USD Coin (USDC) constitutes a smaller part of this figure with $314 million.
In the latest developments, Circle, the company behind USDC, announced last month that it had confidentially filed plans for an initial public offering (IPO). The move comes after Circle abandoned its attempt to go public through a blank check deal a year ago.
USDC’s circulation, which once reached as high as $56 billion, has gradually declined. This downward trend began after Circle announced $3.3 billion in debt to Silicon Valley Bank, which collapsed in March last year. During this period of banking turmoil in the US, the token briefly deviated from its peg.
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