Circle backs regulation of stablecoin issuers as banks

The main operator of the stablecoin USDC, the American company Circle, supported the Biden administration’s plan to regulate stablecoin issuers as banking institutions. This was reported by Yahoo Finance.

“We support this initiative. We believe it represents significant progress in the sector’s development. There is real recognition that as payment stablecoins grow they scale relatively quickly across the internet,” said Circle CEO Jeremy Allaire.

In early November, the President’s Working Group on Financial Markets (PWG) published a report, outlining the risks associated with “stablecoins” and recommending treating the issuers of these assets as banks.

Earlier, Circle announced a restructuring into a “commercial cryptocurrency bank with full reserve.” According to Allaire, the firm is already in talks with regulators, but has not filed an official application.

He noted that the details of the bank’s charter would have to be worked out with all the banking regulators and brought in line with federal law.

“We expect this will be a process of working together with regulatory agencies,” Allaire said.

In his view, large banks have no advantages as potential stablecoin issuers. They lack the necessary infrastructure and understanding of the asset to operate like Circle, the head of the firm stressed.

“Banks, to be honest, are struggling to understand this. I think they will wait to observe the approach to stablecoins. In the absence of concrete rules, they will, with high probability, avoid attempts to issue the asset directly,” Allaire said.

In July, Treasury Secretary Janet Yellen announced the convening of the PWG to discuss regulation of stablecoins.

Also at the Fed meeting, it was stated that the lack of transparency of “stablecoins” could threaten financial stability.

In September, SEC Chair Gary Gensler pointed to the risk of widespread use of stablecoins. He also described them as “poker chips in a cryptocurrency casino”.

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