Circle, the issuer of the second-largest stablecoin by market capitalization, said today that it is scaling back services for individual accounts related to minting stablecoins.
According to a spokesperson from Circle, the company is phasing out support for legacy consumer accounts and has informed retail consumers of this decision. However, this move does not impact business or institutional Circle Mint accounts.
Circle explained that it currently serves qualified institutional clients only and does not directly cater to individual retail customers. Instead, retail users can access USDC through brokerages, cryptocurrency exchanges, and digital asset wallet services.
The decision sparked speculations on social media platforms like X (formerly known as Twitter), especially after screenshots of an email sent to an individual account holder surfaced. The email indicated that Circle would discontinue wiring and minting abilities for the account with zero balance by November 30.
Addressing the concerns, Circle CEO Jeremy Allaire clarified on X that the company hasn’t allowed individuals to open Circle accounts for years, focusing instead on institutional clients. He stated, “The only change is that for a few thousand individual user accounts that were still open with us, we are no longer going to support those accounts.”
Allaire urged people to ignore any fear, uncertainty, and doubt (FUD) and conspiracy theories circulating around this decision. He highlighted the company’s partnership with Coinbase, which provides retail access to USDC without fees.
Circle’s decision to restrict retail investors aligns it more closely with the practices of its main competitor, Tether, which limits USDT minting and redemptions with a minimum threshold of $100,000.
Despite being the second-largest stablecoin with a $25 billion supply, USDC has experienced a significant decline in market share this year. The stablecoin lost 43% of its market capitalization year-to-date, while Tether’s USDT reached a new all-time high of over $84 billion.
Stablecoins like USDC have faced increased regulatory scrutiny in recent times, driven by incidents like the collapse of terraUSD.
Circle’s token lost its dollar peg in March and slumped to an all-time low of $0.8 per coin after the issuer revealed it had nearly 9 percent of its $40-billion USDC reserves stuck at Silicon Valley Bank. However, the stablecoin then recovered its losses after Circle assured investors it would honor the peg despite exposure to failed bank.
Circle also made headlines when it made the tough decision to downsize its workforce in response to a turbulent year for the digital asset industry. Describing the job cuts as a mere marginal reduction in headcount, Circle said that this move is part of a broader strategy to curtail operational expenses and discontinue investments in non-core activities.
The move comes after Coinbase has bought an equity stake in Circle, though they decided to dissolve the Centre Consortium, a private organization governing the USDC stablecoin.
