Circle Discontinues USDC Support on the TRON Blockchain: But Why?

The U.S.-based stablecoin issuer Circle announced this week that it is discontinuing support for USDC on the Tron blockchain in a "phased transition."

“Effective immediately we will no longer mint USDC on TRON.”

Circle Mint customers have time until February 2025 to transfer their stablecoins to other blockchains or redeem them directly with Circle. Retail users were recommended to transfer or redeem their USDC via third parties, as they are not served directly by Circle.

The reasons given for the decision were somewhat vague and generic:

“Our decision to discontinue support for USDC on TRON is the result of an enterprise-wide approach that involved the business organization, compliance and other functions across our company. This action aligns with our efforts to ensure that USDC remains trusted, transparent and safe...”

The community reaction has been mixed. While some users support the decision, others raise concerns about Circle’s true level of decentralization and the underlying reasons for the move. Some have suggested that it was a calculated move to target a chain where Tether has significant capital, calling it “corporate posturing against a competitor”. Other user theories include political schemes and U.S. government involvement. Users also expressed discontent that Tron was the only network that allowed the use of USDC with low fees.

This is not the first time Circle has tried to distance itself from Justin Sun and his company. At the end of last year, Circle wrote a formal letter to Senators, denying all connections to illicit terrorist financing through Sun's Tron network following the CfA complaint.  The complaint alleged that Justin Sun, his blockchain Tron, and Circle might be participating in financing terrorist organisations. At the time, Circle pointed out that neither Justin Sun nor any entity he owned or controlled had accounts with Circle, as they had all been terminated in February 2023. It is unclear why USDC continued to be minted and traded on Tron despite all these bold statements. 

Another reason for this step might have been recent TrueUSD price fluctuations. Sun's stablecoin hasn't been looking particularly stable lately. It first depegged in January and has since been trading well below its intended $1 peg, reaching as low as $0.974. At the time of writing, TUSD was trading at $0.976.

Justin Sun hasn’t directly commented on Circle's decision but, around the same time, reminded his followers that Tron remains an operational decentralized network moving forward:

"We respect and support each developer's development decisions and hope to encourage them to develop on TRON. Ultimately, TRON's vision is to become the largest and most prosperous decentralized financial protocol in the world."

Other than that, Sun continue to be his usual self, spamming encouraging posts about HTX DAO, which recently formally announced its inception and launched its native coin. 

Apparently, the decision might not have a huge impact on the network. USDC was a small token on Tron with very little usage compared to its main competitor, USDT. However, the worrying announcement combined with Sun’s generally bad reputation, the crypto community’s extreme reliance on social media and its tendency to believe in various speculations and conspiracy theories could form a serious threat to Sun’s empire, which is apparently not that confidently stable.