Jeremy Allaire, CEO of Circle, argues that “payment stablecoins” should be viewed as payment systems rather than securities
In a recent interview with Bloomberg on February 24th, Circle CEO Jeremy Allaire criticized the U.S. Securities and Exchange Commission’s (SEC) attempts to regulate stablecoins, contending that these digital currencies should not fall under the SEC’s jurisdiction. He stressed that stablecoins linked to the U.S. dollar, referred to as “payment stablecoins,” should be overseen by banking regulators instead. He pointed out that this regulatory framework is already being adopted by governments globally, including the U.S.
Allaire highlighted that the landscape of stablecoins is diverse, with numerous variations available in the market. Nevertheless, he asserted that the majority of regulators recognize stablecoins as a payment system, arguing that they should not be classified or regulated as securities by the SEC.
While he is against SEC oversight of stablecoins, Allaire is in favor of the agency’s initiative to implement stricter rules around cryptocurrency custody. He explained that qualified custodians can offer essential control mechanisms and protections against bankruptcy, ensuring the safety of assets against potential loss or theft.
Allaire’s statements follow recent SEC actions against the stablecoin issuer Paxos and the TerraUSD stablecoin. Additionally, there were claims that Circle had received a Wells notice from the SEC, which the company has refuted. Currently, Circle’s USD Coin (USDC) stands as the second-largest stablecoin, boasting a market cap of $42 billion, trailing Tether’s USDT, which has a $70 billion market cap.
Allaire’s perspective on stablecoin regulation aligns with that of SEC Commissioner Hester Peirce, who has recently suggested that Congress should address the regulatory void surrounding cryptocurrencies and enforcement measures. Allaire argues for the classification of stablecoins as payment systems regulated by banking authorities, rather than as securities under the SEC, emphasizing the necessity for clear, consistent regulations throughout the sector.
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