Stablecoin Legislation Could Be Passed Soon, As House Committee Chair Maxine Waters Confirms
The unexpected failure of Silicon Valley Bank sent ripples through the financial sector, leading to market instability and a temporary disconnection of Circle’s USDC stablecoin from its dollar peg. Consequently, Circle’s leadership is urgently urging U.S. Congress members to advance stablecoin legislation.
Rep. Maxine Waters (D-CA), Chair of the House Committee on Financial Services, has indicated that this legislation could pass within days, although its progress has been hindered by uncertainties regarding the political control of the House of Representatives. She emphasized her collaboration with Rep. Patrick McHenry (R-NC), highlighting the bipartisan effort to address stablecoin regulation.
Rep. Waters stated
“The primary factor that hampered its passage was the expectation that the House would transition to Republican control, leading to the belief that they should spearhead the initiative rather than us Democrats,”
Dante Disparte, Circle’s Chief Strategy Officer and Head of Global Policy, supported the push for swift legislation during a recent conversation with Yahoo Finance. He expressed that the recent events serve as a crucial alert for regulators, urging prompt action to foster responsible innovation instead of implementing prohibitions.
Following the turmoil from the Silicon Valley Bank’s collapse, Circle’s USDC stablecoin momentarily traded below its dollar peg, dipping as low as $0.89 on Saturday. However, Circle managed a swift recovery by committing to utilize its balance sheet to mitigate risks stemming from the bank’s downfall.
Late Sunday, regulators intervened to secure all deposits at Silicon Valley Bank, both insured and uninsured, to prevent wider fallout. As an SVB depositor, Circle will receive full compensation from the FDIC. The company noted that approximately 80% of its reserves are held in short-term Treasury securities, with the remaining 20% in cash.
Disparte pointed out the irony that Circle, which functions within the digital asset realm, has had to shield itself from traditional banking counterparts. He further emphasized the need for serious policy discussions, asserting that regulatory intervention was a prudent choice to avert further instability.
Circle’s advocacy for stablecoin legislation is timely, as the digital asset market expands while traditional banks remain hesitant. With evident bipartisan backing, there is optimism that legislation can be expedited to promote responsible innovation and avert future market disruptions.
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