This week, Jeremy Allaire, CEO of Circle – issuer of a leading dollar-based stablecoin USDC, forwarded a letter to Congressional leaders urging action on stablecoin legislation, providing rules for the industry to develop with surety.
Following the collapse of FTX and the collateral damage of crypto contagion, legislation addressing the crypto industry may encounter little interest. The one exception may be stablecoin rules as regulated digital currency is more akin to payment rails as opposed to altcoins that litter the cryptoverse.
Addressed to the leaders and ranking minority members of both the House Committee on Financial Services and the Senate Banking Committee, Allaire explained that:
“The industry is moving from its “dial-up” phase, where payment stablecoins and blockchains have helped to facilitate the buying and selling of digital assets, to the utility phase, where traditional commerce, from buying a cup of coffee to funding a new company, will converge with traditional financial services. Reasonable, workable, and clear legislation can unleash new economic activity, offering businesses and consumers the necessary assurances that the value embedded in payment stablecoins is protected under U.S. law, while shielding consumers and markets from deleterious and irresponsible financial alchemy.”
Stablecoins that are regulated and based on verified reserves may provide immediate transfers with minimal cost while expanding the dominance of the US dollar as the world’s reserve currency.
But none of this can happen without bright-line rules regarding who can issue a stablecoin and how it is regulated, ensuring financial stability and strict customer protection. The alternative is “imperiling consumers,” and encouraging “regulatory arbitrage,” according to Allaire.
Allaire requested the Congressional leaders move expeditiously to propose new rules, which have been in process for many months now.
“Blockchain technology and payment stablecoins have the capacity to positively reshape the financial system to advance U.S. economic competitiveness, technological leadership, and national security goals,” Allaire told the Senatores and Representatives, while warning that the consequences of inaction are “significant.”
The letter is available here.
