In a significant move that has sparked debate across the crypto industry, Anchorage Digital — a leading cryptocurrency custodian — has announced it will cease support for USDC, one of the most widely used stablecoins in the digital asset ecosystem.
This decision, first reported by CoinDesk on June 27, has drawn sharp criticism from Circle, the issuer of USDC, as well as other key players in the blockchain and fintech space. The shift reflects growing concerns about regulatory oversight, reserve transparency, and long-term resilience in the rapidly evolving stablecoin market.
Why Anchorage Is Moving Away from USDC
At the heart of this transition is Anchorage’s newly introduced Stablecoin Security Matrix, a framework designed to evaluate stablecoins based on critical factors such as regulatory compliance, reserve asset management, and structural decentralization.
According to this matrix, three stablecoins no longer meet Anchorage Digital’s internal standards for long-term institutional-grade resilience:
- USDC (USD Coin)
- Agora USD (AUSD)
- Usual USD (USD0)
Rachel Anderika, Global Head of Operations at Anchorage Digital, explained the rationale behind the decision:
“Based on our Stablecoin Security Matrix, USDC, AUSD, and USD0 no longer satisfy our internal benchmarks for enduring strength. Specifically, we’ve identified high concentration risks tied to their issuing structures — a factor institutions should carefully assess.”
Anchorage emphasized its commitment to supporting only those stablecoins that demonstrate strong transparency, operational independence, robust security protocols, and alignment with anticipated global regulatory frameworks.
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Regulatory Scrutiny and Reserve Concerns
One of the primary criticisms leveled by Anchorage against USDC involves what it describes as insufficient prudential regulation. According to CoinDesk’s analysis, the report claims that approximately 15% of Circle’s reserves are held in cash deposits at traditional banks — a setup that introduces counterparty risk and raises questions about full reserve backing during financial stress events.
However, industry data suggests otherwise. Multiple audits and attestations have consistently shown that USDC maintains full reserve parity, with assets held in cash and short-duration U.S. Treasuries. Circle has also been proactive in complying with emerging regulations, positioning itself as a leader in responsible stablecoin innovation.
Still, Anchorage argues that even if reserves are technically sufficient, the centralized nature of issuance and oversight poses systemic risks — especially for institutional clients who require fail-safe mechanisms in volatile markets.
Industry Backlash and Defense of USDC
The reaction from the crypto community was swift. Viktor Bunin, Protocol Specialist at Coinbase — which co-developed USDC with Circle — called the report “one of the most obvious hit jobs executed with shockingly poor craftsmanship.”
Coinbase’s criticism highlights a broader tension within the crypto ecosystem: balancing innovation with security, and competition with credibility.
Circle issued a formal statement defending its compliance posture:
“We adhere to the current U.S. regulatory standards applicable to leading fintech and payment companies. Notably, we are the first stablecoin issuer to be fully compliant with the European Union’s landmark Markets in Crypto-Assets (MiCA) regulation.”
This compliance milestone underscores Circle’s ambition to operate within regulated financial systems rather than outside them — a strategy increasingly favored by traditional financial institutions exploring blockchain integration.
The Crossroads of Stablecoin Evolution
Anchorage’s decision comes at a pivotal moment for stablecoins. As noted in a recent report by the Bank for International Settlements (BIS), stablecoins are at a crossroads: once seen as niche tools for crypto traders, they are now being seriously evaluated by mainstream financial institutions.
Yet, challenges remain. The BIS report identifies several fundamental hurdles:
- Stability under stress
- Widespread acceptability
- Public trust
- Real-world utility beyond speculation
“Stablecoins need to overcome deep infrastructure, compliance, and economic barriers before they can function as true money — not just digital chips in a speculative casino.”
Despite these obstacles, interest from major payment networks like Mastercard and Visa indicates that the potential is real. These companies are actively testing use cases for stablecoins in cross-border payments, remittances, and programmable finance.
The early phases of any transformative technology are inherently turbulent. But foundational work is underway — from regulatory clarity to technical upgrades — that could position stablecoins as core components of future financial infrastructure.
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Frequently Asked Questions (FAQ)
Q: Why is Anchorage Digital dropping USDC support?
A: Anchorage cites concerns over centralized issuer structure and perceived gaps in regulatory oversight. Their internal Stablecoin Security Matrix found USDC lacking in long-term institutional resilience criteria.
Q: Is USDC still safe to use?
A: Yes. USDC is backed 1:1 with reserves in cash and U.S. Treasuries, undergoes regular audits, and is issued by Circle — a regulated financial entity compliant with MiCA and U.S. standards.
Q: What stablecoins does Anchorage now prefer?
A: While not explicitly naming alternatives, Anchorage favors stablecoins with decentralized issuance models, transparent reserve reporting, independent governance, and strong regulatory alignment.
Q: Could other custodians follow Anchorage’s lead?
A: It’s possible but unlikely on a large scale. Most major custodians and exchanges continue to support USDC due to its liquidity, transparency, and widespread adoption.
Q: How might this affect USDC’s market position?
A: Minimal impact in the short term. USDC remains the second-largest stablecoin by market cap, widely used across DeFi, CeFi, and enterprise applications.
Q: What are the implications for institutional investors?
A: Institutions may re-evaluate counterparty risk and diversify across multiple stablecoins. However, USDC’s compliance track record continues to inspire confidence among regulated entities.
The Road Ahead for Digital Asset Custody
As digital assets mature, so too must the frameworks used to evaluate them. Anchorage’s decision may be controversial, but it underscores an essential truth: not all stablecoins are created equal.
For investors, developers, and financial institutions alike, due diligence is more important than ever. Metrics like reserve composition, audit frequency, jurisdictional compliance, and governance structure must inform custody choices — not just brand recognition or trading volume.
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While USDC remains a dominant force in the stablecoin landscape, scrutiny like this pushes the entire industry toward greater accountability. In the long run, such pressure benefits users by driving improvements in transparency, resilience, and regulatory harmony.
The journey toward mainstream adoption isn’t linear — but every debate brings the crypto ecosystem one step closer to maturity.
Core Keywords: stablecoin, USDC, Anchorage Digital, Circle, cryptocurrency custody, regulatory compliance, digital asset security, MiCA regulation