• Circle CEO Jeremy Allaire believes that the U.S. Securities and Exchange Commission should not be responsible for regulating stablecoins.
• Allaire favors separate SEC regulations that could impose stricter rules around cryptocurrency custody, such as qualified custodians providing appropriate controls and protection against bankruptcy.
• The SEC has recently taken action against the TerraUSD stablecoin and associated assets, as well as issuing a Wells notice to Paxos regarding its Binance USD (BUSD) issuance at the request of New York regulators.
Circle CEO: Stablecoin Regulation Should Not Be Assigned to U.S. SEC
Mike Dalton · 12 hours ago · 2 min read
Circle CEO Jeremy Allaire told Bloomberg on Feb. 23 that the U.S. Securities and Exchange Commission should not be tasked with regulating stablecoins, insisting that they can instead be treated as payment systems. He also expressed his preference for separate SEC regulations that could impose stricter rules around cryptocurrency custody, such as qualified custodians providing appropriate controls and protection against bankruptcy.
SEC Actions Against Stablecoins
The SEC has recently taken action against the TerraUSD stablecoin and associated assets on Feb 16th, which lost most of its value in May 2022 due to its algorithmic-based value determination by crypto assets.. Additionally, Paxos received a Wells notice from the regulator after it stopped issuing Binance USD (BUSD) at the request of New York regulators last February 13th.. Unlike these cases, Circle’s own USDC is backed by traditional assets and maintains its $1 price peg..
SEC Chair’s Views on Stablecoins
SEC chair Gary Gensler has repeatedly suggested that stablecoins could come under the regulator’s jurisdiction in recent months, suggesting last September that these are similar to certain securities while also comparing them to poker chips in late January 2021 .
Regulatory Environment for Cryptocurrency
As regulatory environments become increasingly strict towards cryptocurrencies globally , Allaire said he favors separate SEC regulations that could impose stricter rules around cryptocurrency custody . He stated: “We have seen a lot of lessons learned [when] random exchanges have your assets…There is a reason why you have that kind of [custodial] rule.“
Conclusion
In conclusion, Circle CEO Jeremy Allaire believes that the U.S Securities and Exchange Commission should not be responsible for regulating stablecoins since they can instead be treated as payment systems subject to other banking regulation activities according to him.. As regulatory environments become more complex towards cryptocurrencies globally , he believes that stricter rules should be imposed so there would be better protection against bankruptcy