Crypto: Stablecoins scramble for safe havens as sanctions threat escalates
A major stablecoin issuer is formulating an intricate plan to ensure it always remains beyond the reach of centralised authority after US regulators froze USDC (USDC-USD) funds without warning. The US Treasury’s Office of Foreign Assets Control, (OFAC) strong-armed USDC issuer Circle into freezing over 75,000 USDC in the wake of the Tornado Cash affair. In early August, OFAC swooped on the crypto “mixer” Tornado Cash after allegations that it was used for illicit transactions, such as those by Pyongyang’s infamous hacking outfit, the Lazarus group. The move by OFAC led to cries of indignation from crypto-proponents as the ability to function autonomously and beyond the reach of state authorities is a fundamental principle of the crypto gospel. The heightened threat of monetary censorship in the wake of the Tornado Cash affair has encouraged DAI (DAI-USD) stablecoin issuer MakerDao to try to become censorship resistant via collateralising their dollar peg with real-world assets as opposed to exposure to USDC. MakerDAO founder Rune Christensen sees the OFAC crackdown as a sign that regulators are advancing towards “an eventual zero tolerance for anything that doesn’t give full control and surveillance powers to the state”.