Issuers of stablecoins like Tether (USDT) and USD Coin (USDC) may soon be required to work under the same regulations as banks, but that seemingly doesn’t frighten the CEO of the USDC-issuer Circle.
Commenting on the Biden administration’s proposal to work on a bank-like regulation for stablecoin issuers, Circle CEO Jeremy Allaire took a supportive stance for the recommendation. He highlighted that the proposal’s aim to regulate dollar stablecoin issuers in the United States financial system as banks at the federal level by the Federal Reserve represents significant progress for the industry’s growth.
Allaire noted the current steps would upgrade the current money transmission-focused regulations “to a much more fundamental infrastructure at the core of what potentially the future of banking and capital markets look like.”
“There's a real recognition that as these payment stablecoins grow, they could grow at internet scale relatively quickly,” Allaire commented. When the stablecoin market grows into the hundreds of billions in circulation and trillions in transactions, the risks to financial markets and financial stability become much more significant, he added.
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As Cointelegraph reported, the Biden administration’s proposal aims to create a new “special-purpose charter” for stablecoin issuers, putting them in the same category as banks. Allaire believes that the details on a bank charter for a crypto company might need to get worked out over time with both the FDIC and other agencies that oversee banks.
Stablecoins have become a central talking point for regulators. In September, the U.S. Treasury reportedly held several meetings to examine the risks of stablecoins for users, markets and the financial system.