Anchorage Phases Out USDC, AUSD, USD0 Over Stability Concerns

Anchorage Digital, a crypto custodian and federally chartered bank, has announced that it will begin phasing out support for certain stablecoins, including USDC, Agora USD (AUSD), and Usual USD (USD0). The decision is based on a "Stablecoin Safety Matrix" that ranks stablecoins based on regulatory oversight and reserve asset management. According to Anchorage, these stablecoins no longer meet their internal criteria for long-term resilience due to elevated concentration risks associated with their issuer structures.

Anchorage has directed its institutional clients to convert these stablecoins into the rival token Global Dollar (USDG). The firm's decision has drawn criticism from industry players, who allege that the move is misleading and self-serving. Anchorage is part of the consortium behind USDG, which is issued by Paxos and backed by a group of firms that share the income from the reserve assets backing the token.

Nick Van Eck, whose firm Agora issues AUSD, accused Anchorage of misrepresenting facts about his stablecoin and failing to disclose its commercial interest in Global Dollar. He stated that if Anchorage had simply delisted USDC and AUSD to prioritize the stablecoins that they have an economic interest in, he would understand it as a business decision. However, he found the attempt to delegitimize AUSD and USDC for 'security concerns' while knowingly publishing false information to be unserious and bizarre.

Viktor Bunin, protocol specialist at digital asset exchange Coinbase, also criticized the decision, stating that he had never seen such an obvious hit piece be so poorly executed. Coinbase jointly launched USDC with Circle in 2018 and shared revenue from the reserve assets backing the token. Jan Van Eck, father of Nick Van Eck and CEO of asset manager Van Eck, which manages AUSD's backing assets, also questioned the risk assessment, pointing out that according to the matrix, Circle’s USDC and AUSD have reserve issues despite AUSD being backed 100% by treasuries and its reserve manager being regulated by multiple regulators.

Circle, in a statement, defended its "long-standing compliance record" and "strong reputation as an industry leader." The firm stated that it complies with the prevailing U.S. regulatory standards that apply to leading fintech and payments firms and was the first stablecoin issuer to achieve full compliance with the European Union's landmark crypto law. Circle also emphasized that USDC is 100% backed by fiat-denominated reserves and has robust primary liquidity through a well-developed network of banks, representing what they view as the highest levels of transparency, safety, and operational resiliency in the industry.

Support for Circle and Agora came from outside their camp as well. Chen Fang, chief revenue officer at crypto custodian BitGo, stated that BitGo is not dropping USDC support. Joshua Lim, co-head of markets at crypto prime broker FalconX, also expressed support, stating that his company is ready to support clients using AUSD and USDC. He emphasized that Agora and Circle are long-standing partners of FalconX, and their customers count on safe, transparent rails for USD settlement.

The controversy comes at a time when firms are jockeying for position in the rapidly-growing stablecoin sector as regulation advances in the U.S. The U.S. Senate recently passed the GENIUS Act that aims to enact clear rules for the asset class and issuers, which could open the gates for broader adoption. The move by Anchorage highlights the increasing competition and scrutiny in the stablecoin market, as global banks, payments firms, and crypto companies vie for dominance in this rapidly evolving sector.