Monday, May 20, 2024

Jeremy Allaire, Circle’s CEO, Urges U.S. to Regulate Stablecoins: ‘Now is the Moment to Step Up.’

Jeremy Allaire, who helms Circle, a leading U.S. stablecoin firm, is advocating for the establishment of stablecoin regulations to protect the country’s prerogative over the creation of digital dollars. During a congressional hearing, Allaire pointed out that several nations have already defined and implemented policies for the creation of dollar-pegged stablecoins, placing the U.S. at a disadvantage.

Allaire remarked:

“We’re witnessing governments globally — including the EU, U.K., Japan, Hong Kong, Singapore, and more — laying down the laws for the issuance and functioning of digital dollars in their respective markets, which is quite remarkable.”

Additionally, he elaborated on the potentially “disastrous repercussions” the absence of regulation might have for the U.S. dollar’s competitiveness in an internet-centric world governed by digital interactions. Allaire recently took to social media to reemphasize his call for action, declaring: “Now is the moment to step up.”

The Impact of Commercial Banking on USD Coin

Circle is the originator of the usd coin (USDC), the crypto market’s second-largest stablecoin, boasting a market capitalization of $28.3 billion. However, the coin experienced a depegging incident in March due to the collapse of Silicon Valley Bank (SVB), which held roughly 8.8% — approximately $3.3 billion — of the total reserve backing the USDC stablecoin.

The depegging, which caused the usd coin’s value to plummet to as low as $0.85, was reversed following the assurance that all SVB depositors would be compensated in full. At that juncture, Allaire underscored the need for explicit regulations to prevent such events from recurring, urging the introduction of “full-reserve digital currency banking that safeguards our foundational internet money and payment systems from the risks of fractional reserve banking.”

Stablecoins have emerged as a crucial component of the cryptocurrency sector, marked by a substantial surge in their use. According to Kaiko, a provider of cryptocurrency market data, stablecoins now constitute 76% of all cryptocurrency transactions, signifying a 16% increase since the outset of 2022.

On June 8, House Financial Services Committee Chair Patrick McHenry unveiled a draft of a new stablecoin legislation.

What are your thoughts on Jeremy Allaire’s appeal for stablecoin regulation? Please share your views in the comments section below.

Frequently Asked Questions (FAQs) about Stablecoin Regulation

Who is Jeremy Allaire?

Jeremy Allaire is the CEO of Circle, a leading U.S.-based stablecoin company responsible for the issuance of usd coin (USDC).

What did Jeremy Allaire say about stablecoin regulation?

In a congressional hearing, Allaire called for the U.S. to establish stablecoin regulation. He stressed the fact that other countries, such as the EU, U.K., Japan, Hong Kong, and Singapore, have already implemented frameworks for the issuance of dollar-backed stablecoins.

What is Circle’s usd coin (USDC)?

USDC is a type of stablecoin issued by Circle, the second largest of its kind in the cryptocurrency market. It’s pegged to the U.S. dollar, meaning its value is designed to remain steady relative to the dollar.

What incident occurred with the USD Coin?

In March, the USD Coin suffered a depegging incident due to the collapse of Silicon Valley Bank (SVB). This bank held about 8.8% of the total reserve backing the USDC stablecoin, leading to a significant decrease in the coin’s value.

What does Allaire propose as a solution to prevent another depegging incident?

Allaire suggested establishing “full-reserve digital currency banking” as a means to protect the foundational internet money and payment systems from the risks of fractional reserve banking.

What recent legislative developments have there been regarding stablecoins?

On June 8, House Financial Services Committee Chair Patrick McHenry released a draft of new stablecoin legislation, marking a step towards establishing regulatory frameworks for stablecoins in the U.S.

More about Stablecoin Regulation

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5 comments

StableCoinHodler June 27, 2023 - 6:25 am

Scary what happnd with USDC….how can we trust these coins if things can go south like that! Need more regulation, yes…

Reply
BlockchainBeliever June 27, 2023 - 4:33 pm

anyone else here read this and get a chill? The consequences he talks about could be real… US need to act, and fast.

Reply
FinTechGuru June 27, 2023 - 5:31 pm

I have to agree with Allaire here, other countries are miles ahead. It’s about time we acted. Not sure why we’re always so slow to react.

Reply
CryptoFan2023 June 27, 2023 - 5:40 pm

That’s what we needed right! someone with guts to say it out loud… US needs to step up its game. Props to Allaire.

Reply
DigiDollarDude June 28, 2023 - 1:19 am

Good on Jeremy! Someone needs to ring the alarm bells. Can’t let the digital dollar slip in this fast-paced world.

Reply

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