Welcome to the CoinSmart crypto recap. Let’s look at the hottest stories that came up this past week. Here is an overview:
- Circle Takes Steps To Shield USDC Stablecoin from Debt Ceiling Concerns
- First Digital Introduces US Dollar-Pegged Stablecoin FDUSD
- Bybit to Exit Canadian Market Amid Regulatory Changes
- Crisis Hits Multichain Amid Arrest Rumors
Circle Takes Steps To Shield USDC Stablecoin from Debt Ceiling Concerns
Circle Internet Financial, a key player in the crypto industry and the company behind the USDC stablecoin, has decided to divest all U.S. Treasury bonds from the reserve fund backing its stablecoin. This decision is a protective measure against potential fallout from the ongoing U.S. debt ceiling concerns. The Circle Reserve Fund, managed by Blackrock, now holds 100% of its $24.7 billion fund in overnight U.S. Treasury Repurchase Agreements, marking a significant change from its previous composition in April 2023 when it held over $30 billion in U.S. Treasury Bonds. This shift may expose Circle and USDC to volatility and fluctuations associated with overnight U.S. Treasury Repurchase Agreements. However, it also demonstrates proactive risk mitigation in the face of macroeconomic uncertainties, reinforcing the resilience of cryptocurrencies.
First Digital Introduces US Dollar-Pegged Stablecoin FDUSD
Hong Kong-based custodian First Digital is launching a new stablecoin, “First Digital USD” (FDUSD), pegged to the U.S. dollar and regulated in Asia. Backed on a one-to-one basis by the U.S. dollar or an equivalent asset, the reserves will be held in segregated accounts at Asian institutions. FDUSD is programmable and capable of executing financial contracts, escrow services, and insurance without intermediaries. The company said it will work with local and international regulators to ensure full compliance. The announcement is significant given the new “Guidelines for Virtual Asset Trading Platform Operators” effective from June 1 in Hong Kong. The U.S. regulatory uncertainty in the crypto sector is seen as a potential push for industry players towards more favorable jurisdictions like Hong Kong.
Bybit to Exit Canadian Market Amid Regulatory Changes
Bybit, a cryptocurrency exchange, has announced its decision to withdraw from the Canadian market starting May 31, following recent regulatory changes in the country. The exchange will not accept new account openings after May 31 and will allow existing customers to make new deposits and enter into new contracts until July 31. Bybit’s move follows Binance’s similar exit due to the challenging regulatory environment in Canada, which now requires crypto trading platforms to obtain approval from the Canadian Securities Administrators.
Crisis Hits Multichain Amid Arrest Rumors
Crypto startup Multichain is encountering operational issues following rumors of the arrest of some team members in China. The company has lost contact with its CEO and cannot access vital maintenance servers, leading to problems with its cross-chain services and resulting in the suspension of certain services. While the company has $1.46 billion locked in DeFi apps, it’s unclear whether these funds are accessible. Its native token, MULTI, has lost about 50% of its value since these problems became public. Amidst unverified reports of staff arrests, Binance has temporarily halted deposits for some tokens linked to Multichain. In unrelated news, employees of yuan-backed stablecoin issuer Trust Reserve are allegedly being held by local authorities, though the reasons remain unclear.
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