Anchorage Digital, a crypto custodian and federally chartered bank, said it will start phasing out and direct institutional clients to convert USDC

and other stablecoins into rival token Global Dollar (USDG) in a sweeping move that drew criticism from industry players.

The firm released a “Stablecoin Safety Matrix” that ranks stablecoins based on regulatory oversight and reserve asset management on Tuesday.

Circle-issued USDC, which is the second-largest stablecoin with a $61 billion supply and is popular among institutions, was deemed no longer suitable under Anchorage’s security framework. Two other, smaller tokens, Agora USD (AUSD) and Usual USD (USD0), were also slated for removal. Stablecoins are cryptocurrencies with their prices tied to an external asset, predominantly to the U.S. dollar.

“Following our Stablecoin Safety Matrix, USDC, AUSD, and USD0 no longer satisfy Anchorage Digital’s internal criteria for long-term resilience,” Rachel Anderika, head of global operations at Anchorage, said in a statement justifying the decision. “Specifically, we identified elevated concentration risks associated with their issuer structures — something we believe institutions should carefully evaluate.”

“Anchorage Digital is focused on supporting stablecoins that demonstrate strong transparency, independence, security, and alignment with future regulatory expectations,” she added.

Stablecoin race heats up

The move came at a time when competition in the stablecoin market is heating up with global banks, payments firms and crypto companies jockeying for position in the rapidly-growing sector.

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. On Friday, White House crypto czar David Sacks suggested that the bill may become law as soon as next month, pending passage in the House of Representatives.

Reports by Citi and Standard Chartered reports projected the asset class to grow from the current $250 billion to trillions through the next few years. Circle (CRCL), the company behind the USDC token, recently went public and skyrocketed in valuation.

Anchorage gave USDC a score of 2 out of 5 for regulatory oversight and reserve management. The report said there was “no substantive prudential oversight” and that Circle had a large — about 15% — amount of its reserves held in cash at banks. Notably, USDC depegged temporarily in March 2023 when partner bank Silicon Valley Bank went under. Tether’s USDT, the world’s largest stablecoin, had a higher rating with Anchorage pointing to it being regulated in El Salvador.

S&P Ratings rated USDC “strong,” its second-best rating in its stablecoin stability assessment. Bluechip, a crypto-native stablecoin rating firm, gave USDC a B+ rating in its economic safety rating.

Industry leaders push back

Anchorage’s decision met with fierce pushback.

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. USDG is issued by Paxos and is backed by a consortium of firms that share the income from the reserve assets backing the token. Anchorage is a founding partner in that consortium.

“If Anchorage had just delisted USDC and AUSD to prioritize the stablecoins that they have an economic interest in, I would understand it as a business decision,” he said in an X post. “But attempting to delegitimize AUSD and USDC for ‘security concerns,’ while knowingly publishing false information, is unserious and bizarre.”

“Never seen such an obvious hit piece be so poorly executed,” said Viktor Bunin, protocol specialist at digital asset exchange Coinbase. 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.

“If you need a laugh, check out this ‘safety’ matrix before Anchorage pulls it down. According to the matrix, Circle’s USDC (world’s second largest stablecoin) and AUSD (backed 100% by treasuries) have reserve issues,” he posted on X. “Oh, and by the way, AUSD’s reserve manager is regulated by umpteen different regulators.”

Circle, in a statement sent to CoinDesk, defended the firm’s “long-standing compliance record” and “strong reputation as an industry leader.”

“We comply with the prevailing U.S. regulatory standards that apply to leading fintech and payments firms, and we were the first stablecoin issuer to achieve full compliance with the European Union’s landmark crypto law,” a Circle spokesperson said. “USDC is 100% backed by fiat-denominated reserves and has robust primary liquidity through a well-developed network of banks, representing what we view as the highest levels of transparency, safety, and operational resiliency in our industry.”

Support came for Circle and Agora outside of the two stablecoins’ camp.

“For the record, BitGo is not dropping USDC support,” said Chen Fang, chief revenue officer at crypto custodian BitGo.

“Agora and Circle are long-standing partners of ours, and our customers count on safe, transparent rails for USD settlement,” said Joshua Lim, co-head of markets at crypto prime broker FalconX, adding that his company “is ready to support clients using AUSD and USDC.”

Why it matters: Imagine you’re deep in the backcountry when a bear suddenly appears, sizing you up. Typically, you’d reach for your tried-and-true can of bear spray – trusted by wildlife experts and often even more reliable than firearms. However, one adventurous DIY YouTuber has built something far more theatrical: the Bear Blaster 5000.

Drawing from over 20 years of experience in high-voltage engineering, Jay Bowles from the Plasma Channel created a device that emits fierce, crackling sparks and flashes. He aimed to make a device scary enough to send most animals packing. The idea is rooted in animal behavior. Many creatures instinctively avoid sounds that resemble natural danger, like thunder and lightning. High-voltage arcs produce similar auditory cues, and Jay decided to exploit that.

The Bear Blaster runs on two voltage multiplier circuits. Jay initially tried a full-wave design, but the arcs could only travel a few inches. So he switched to a pair of half-wave multipliers – one on each side – wired in reverse polarity. That setup produced substantial positive and negative charges, pushing voltage in opposite directions and enabling longer, more powerful plasma bursts. The final result: a sci-fi-looking contraption spitting five-inch arcs and delivering a staggering 286,000 volts. Even humans might think twice before sticking around.

Each electrode is fitted with a nut to focus the electric field and increase arc reliability. A coat of resin also protects the internal capacitors and diodes to ensure safety. Powering all this is a compact battery system that delivers about five minutes of continuous high-voltage sparks, which charges in just 15 minutes. Encasing all that tech is a sleek 3D-printed shell that fans of the Halo franchise would say resembles the iconic Plasma Pistol.

While it doesn’t shoot balls of plasma, it does unleash visible electric arcs between two rounded electrodes. Jay notes that just a few seconds of flashing and crackling is usually enough to spook a timid bear or other wildlife.

“I don’t know about you, but this? That’s a thing of pure beauty right there,” Jay exclaims in his video. “Look, there’s no way in hell any animal would charge at you with this thing going off. It worked so much better than I actually planned for.”

Jay acknowledges that no tool is flawless. While the Bear Blaster offers a creative, non-lethal alternative for those seeking options, it likely won’t replace traditional bear spray. Aggressive bears may not be deterred by light and noise alone, and experienced hikers still advise carrying bear spray for added security. However, it is way more dramatic than banging on a pan.