Since its introduction in 2018, the USDC stablecoin has been used to settle over $12 trillion in blockchain transactions, the company has said.

Crypto issuer Circle saw a surge in remittances flow through Asia via its USDC stablecoin, the company said in a new report highlighting how the cryptocurrency is used beyond speculative trading.

USDC is a cryptocurrency pegged to the value of the U.S. dollar, and backed by liquid cash and cash-equivalent assets.

In 2022, $130 billion worth of USDC flowed into Asia, the report says. According to Circle, the Asia-Pacific region accounts for 29% of all global digital currency value received compared to 19% for North America, and 22% for Western Europe.

These volumes are also made up of remittance transfers, a big deal for emerging markets with a large diaspora, such as the Philippines. In the report, Circle highlighted how it has partnered with Coins.ph – an exchange based in the country – to try and capture some of this business, worth around $36 billion a year.

In the report, Circle also claims that USDC is helping close the region’s $510 billion trade finance gap, which is the lack of liquidity available to companies for cross-border remittances and credit. This particularly serves in emerging markets with capital outflow restrictions, where businesses often struggle to obtain the necessary funding for international trade.

One company that’s using USDC to bridge this gap is Taipei-based XREX. In a CoinDesk profile from 2022, its founder, Wayne Huang, explained how XREX builds financial pipes between countries using stablecoins, taking advantage of the deep dollar liquidity in Taiwan and the dollar shortfall in other Southeast Asian nations.

Circle also said stablecoins’ use in speculative trading has declined 90% over the past five years.

Elsewhere in the world, the report said that 33% of consumers in Latin America have paid with a stablecoin, and citizens in the region have received $562 billion in digital currency between 2021 and mid-2022.

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Stablecoin issuer Circle held an undisclosed amount of USDC’s cash reserves at now-failed Silicon Valley Bank.

Circle Internet Financial’s USDC stablecoin saw some $1 billion in net redemptions since Friday morning when Silicon Valley Bank (SVB), one of Circle’s banking partners, was shut down by regulators, blockchain transactions from crypto intelligence platform Nansen show.

According to Nansen, Circle burned some $1.6 billion of USDC on Friday, taking out the tokens from circulation as investors redeemed dollars. Circle also minted new coins, adding to the circulation, but much less than it destroyed.

Subsequently, USDC’s market capitalization fell to $42.4 billion from $43.5 billion on Friday, according to data from CoinMarketCap. USDC also depegged from $1, a sign of worry about the state of its reserves.

USDC is the second-largest stablecoin, trailing only Tether’s USDT, and a backbone of the crypto ecosystem. The token’s value is backed by U.S. government bonds and cash-like assets, including a total $11.1 billion of cash deposits at various regulated banks, according to Circle’s website.

Investors grew concerned with the stablecoin’s stability after SVB, one of the banks where Circle held a part of USDC’s backing assets, suffered a bank run. Regulators shut down the bank’s operations on Friday morning.

A Circle spokesperson told CoinDesk Friday afternoon that SVB was one of six banks who managed “the approximately 25% portion of USDC reserves held in cash.”

“While we await clarity on how the FDIC receivership of Silicon Valley Bank will impact its depositors, Circle and USDC continue to operate normally,” the spokesperson added.

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Wire transfer and USDC remain an option for Dapper users.

NFT studio Dapper Labs says it can no longer process with Automated Clearing House (ACH) as Circle, its payments partner, has removed the functionality.

This comes as Silvergate Bank (SI), once the go-to bank for crypto, faces significant financial headwinds and regulatory scrutiny. Over the past month, the majority of Silvergate’s clients have parted ways with the beleaguered bank and stopped using its ACH services, including Coinbase, Circle, Paxos, and Crypto.com among others.

Last week Silvergate abruptly shuttered the Silvergate Exchange Network, a settlement service used by major crypto institutions. This is understood to have played a role in Circle discontinuing ACH services.

Dapper says it will continue to support withdrawals via wire transfer, reducing its fee to $9, and USDC.

Circle, for its part, says regular operations are continuing as it looks to transition to other banking partners in order to resume affected services.

“We are communicating with customers and have taken steps to ensure access to customer funds via alternative payment and redemption channels,” Circle said in a statement.

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In a letter to lawmakers, Jeremy Allaire said inaction will “stunt America’s voice.”

Circle CEO and founder Jeremy Allaire wrote to Congressional leaders for financial services, calling for clear, workable U.S. legislation on stablecoins and warning of the risks to the country of not doing so.

Allaire addressed the letter to Rep. Maxine Waters (D-Cali) and Sen. Sherrod Brown (D-Ohio), who chair the House Committee for Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs respectively, as well as ranking members Rep. Patrick McHenry (R-N.C.) and Sen. Pat Toomey (R-Penn).

Inaction in this area will “stunt America’s voice” as other jurisdictions make progress with establishing comprehensive regulatory regimes for digital assets, according to Allaire.

“The United States is at risk of missing an opportunity to set the rules that will govern the future of payments, money, and other sectors of the global economy,” Allaire said in the letter. He cited China’s development of the digital yuan “with the goal of outpacing the United States and replacing the dollar as the world’s reserve currency.”

Allaire also referred to the risk to consumers in the absence of a clear way of identifying which stablecoins adhere to a bona fide regulatory regime.

“Not all stablecoins are created equal,” he wrote, possibly referring to terraUSD (UST), which plummeted in value in June causing billions of dollars in losses to users worldwide.

Allaire said “reasonable, workable, and clear legislation can unleash new economic activity” through the reassurance it would offer to businesses and consumers that the value embedded in stablecoins is protected by the law. Users would be “shielded from deleterious and irresponsible financial alchemy.”

A stablecoin bill had been expected by many to make its way through Congress sometime this year, however negotiations became bogged down owing to disagreements over topics such as the role of state regulators, the possibility of a future digital dollar in the U.S. and the treatment of customer money held by crypto platforms.

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The venture-capital arm of the USDC stablecoin-issuer backed Nomad and Slope, which were both exploited this week.

This week’s nearly $200 million exploit of Nomad, the cross-chain bridge, and the $6 million drained from Slope Financial wallets have something in common: Both projects are backed by Circle Internet Financial’s venture-capital division.

It’s an additional headache for Circle as it aims to go public later this year. The company, which got into VC investing in late 2021, is best known for issuing a stablecoin called USD Coin (USDC). The entire stablecoin space finds itself under greater regulatory scrutiny following this year’s collapse of Terra’s terraUSD (UST).

Circle, which invests in early-stage blockchain projects and companies, participated in the $8 million Series A for Slope Finance in February and the $22.4 million seed round for Nomad in April.

“We are monitoring the current situation,” a Circle spokesperson responded when CoinDesk asked for a comment regarding the Nomad exploit. The statement was repeated when Circle was asked about Slope Finance.

Circle’s ties to Nomad and Slope didn’t cause any financial damage to the company, according to the spokesperson. The investments, however, showed how the interconnections of a growing industry can cast a shadow.

Circle’s USDC, which is pegged to the U.S. dollar, is the second-largest stablecoin, with a $54 billion market capitalization, according to CoinMarketCap data. It trails only Tether’s $66 billion USDT.

After UST – another stablecoin that used a riskier method of maintaining its peg to the dollar – imploded this year, there were rumblings in Washington that more stablecoin regulation could be on the way.

Unlike UST, which was supposed to keep its one-to-one relationship with the dollar via an algorithm tied to another coin, LUNA (issued by Terra), Circle’s USDC pool of assets looks much more plain vanilla.

In a bid to increase transparency, Circle last month released an unaudited reserve report showing that USDC is backed by $42.1 billion in short-term U.S government bonds and $13.6 billion in cash, funds that could be used to stabilize the coin’s peg and ease industry-wide liquidation fears.

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• The report said “stablecoins could support faster, more efficient, and more inclusive payments options.”
• The White House has been working with economic advisors and regulators for months on the digital assets.

The Biden administration released a highly anticipated report Monday asking Congress to create regulations for stablecoins.

Stablecoins, which are cryptocurrencies tied to government-issued money like the US dollar, could become widely adopted, the report said, adding that a regulatory framework would increase confidence in using the digital assets for payment purposes.

“If well-designed and appropriately regulated, stablecoins could support faster, more efficient, and more inclusive payments options,” according to the report from the President’s Working Group on Financial Markets.

But rules around stablecoins are “urgently needed,” and Congress should impose certain laws like only allowing banks to issue the coins, it added.

“Failure to act risks growth of payment stablecoins without adequate protection for users, the financial system, and the broader economy,” the report warned.

Without stablecoin legislation from Congress, the report also recommended that the Financial Stability Oversight Council consider designating some activities as systemically important. Eventually, that could lead the Federal Reserve to crafting stablecoin rules.

Biden has long been working with top economic advisors and senior regulators such as Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell to propose rules regarding stablecoins. A separate report on digital currencies from the Fed is also expected soon.

Regulators have been grappling with how to manage digital assets in recent months as attention around them has grown. Stablecoins, though they account for only small piece of the more than $2 trillion digital-asset market, have caught the attention of regulators because of their rapid growth.

Well-known coins include ones from Tether, Circle, and Binance, whose tokens’ combined valuation has jumped to $110 billion from $11 billion last year, we reported previously.

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