Feb 22 2024: Circle, a prominent U.S. cryptocurrency company, has announced its decision to halt its backing for the USDC stablecoin on the Tron blockchain network. The move, disclosed on Wednesday, is said to be in line with the company’s ongoing commitment to upholding the integrity and security of USDC.
In a blog post, Circle, headquartered in Boston, revealed that it would immediately cease the creation of USDC tokens on Tron, a blockchain platform known for its rapid growth and extensive use in stablecoin transactions. Notably, Tron’s founder has faced regulatory challenges in the United States, which likely influenced Circle’s decision.
Stablecoins, digital assets designed to maintain a fixed value typically backed by traditional currencies, have gained significant traction in the cryptocurrency market.
While Circle did not specify the reasons behind its move, it emphasized its regular evaluation of blockchain platforms supporting USDC within its risk management framework. USDC, the second-largest stablecoin after Tether, will be impacted by this decision.
According to Circle’s announcement, institutional clients will have until February 2025 to transfer their USDC holdings from Tron to other blockchain networks or redeem them for fiat currency. Retail customers, meanwhile, will retain the option to transfer USDC to alternative blockchains or redeem them through cryptocurrency exchanges and brokerage services.
Despite Circle’s decision, Tron remains steadfast in its goal to become a leading decentralized financial protocol, as expressed by a spokesperson for the platform.
It’s worth noting that Circle terminated accounts held by Justin Sun, the founder of Tron, and his associated entities last year. Sun has been embroiled in legal disputes with the U.S. Securities and Exchange Commission (SEC), which accused him of inflating trading volumes and selling unregistered Tron tokens. Sun has vehemently denied these allegations.
Circle clarified that its decision primarily affects USDC on the Tron blockchain and not individual users or related businesses.
With USDC’s considerable circulation of around $28 billion, it ranks as the eighth-largest cryptocurrency token. On Tron alone, USDC accounts for $335 million in value, according to data from Circle’s website.
Previously, Tron made headlines for facilitating crypto transfers associated with groups designated as terror organizations by multiple countries. In response, a Tron spokesperson emphasized the platform’s lack of control over user actions and denied any association with the identified groups.
