Circle CEO Urges U.S. Government to Issue Stablecoin Regulations

Circle CEO Urges U.S. Government to Issue Stablecoin Regulations

Jeremy Allaire, the CEO of Circle, which is responsible for the issuance of USD Coin (USDC), has expressed concerns about the current state of stablecoin regulation in the United States. During a congressional hearing, Allaire highlighted that other governments have already taken steps to regulate the issuance and operation of digital dollars, specifically referring to dollar-backed stablecoins, and called on the U.S. government to take action by implementing stablecoin rules.

Allaire emphasized the need for stablecoin regulation to preserve the country’s sovereignty over the issuance of digital dollars. He pointed out that various countries, including the European Union, the United Kingdom, Japan, Hong Kong, and Singapore, have already established frameworks for regulating the issuance and operation of digital dollars, which is a significant development.

“We are witnessing governments around the world actually defining the rules for how dollars, digital dollars, are issued and operate in those markets, which is astounding,” Allaire stated.

Furthermore, Allaire highlighted the potential “devastating consequences” that could arise from the lack of regulation, particularly in terms of the competitiveness of the U.S. dollar in a digital-centric world. He recently reiterated his call to action on social media, stating, “It’s time to act.”

Circle, the company behind USD Coin (USDC), is responsible for the second-largest stablecoin in the cryptocurrency market, with a market capitalization of $28.3 billion. Earlier this year, USDC faced a depegging incident when Silicon Valley Bank (SVB), which held approximately $3.3 billion (8.8% of the total reserve backing USDC), faced financial challenges.

The depegging event caused the price of USDC to briefly drop as low as $0.85. However, the issue was resolved when it was announced that all SVB depositors would be fully compensated. At the time, Allaire emphasized the importance of establishing clear rules to prevent such incidents and advocated for the implementation of “full-reserve digital currency banking” to protect the fundamental layer of internet money and payment systems from the risks associated with fractional reserve banking.

Stablecoins have become a significant component of the cryptocurrency market, experiencing a notable surge in their utilization. According to Kaiko, a cryptocurrency market data provider, stablecoins now account for 76% of all cryptocurrency transactions, representing a 16% increase since the beginning of 2022.