The U.S. Securities and Exchange Commission (SEC) is not the right regulator for stablecoins. Circle CEO Jeremy Allaire voiced this view in an interview with Bloomberg.
The company, in partnership with Coinbase, is the issuer of USD Coin (USDC), the second-largest by market capitalization stablecoin.
“I don’t think the SEC is the regulator for stablecoins. There is a reason why, everywhere in the world, including the United States, authorities explicitly say that payment stablecoins fall within the remit of banking regulators,” Allaire said.
In mid-February it emerged that the SEC intends to file a lawsuit against the crypto company Paxos for its role in issuing Binance USD (BUSD). The Commission classified the asset as a security.
Earlier, the New York State Department of Financial Services initiated an investigation into the issuer of the stablecoin. According to Bloomberg, as early as 2022 Circle filed a complaint with the agency alleging allegedly insufficient backing of BUSD by reserves.
In 2021, the SEC requested information from the USDC issuer about certain assets, customer programs and operations. Last week the company confirmed that the Commission has no allegations against it, unlike Paxos.
.@circle has not received a Wells notice. https://t.co/lE74zHVLka
— Dante Disparte (@ddisparte) February 14, 2023
“There are many flavors and scents, as we like to say. Not all stablecoins are created equal. But it is clear that politically worldwide there is a single view — that payments systems are the space for the appropriate regulator,” Allaire said.
Earlier the SEC advocated strengthening the role of qualified custodians with respect to digital assets. Circle’s head broadly supported the Commission’s proposal.
“The presence of qualified custodians who can provide proper oversight and protection against bankruptcy, as well as other things, is an important and highly valuable market structure. We have learned many lessons from our assets ending up with random exchanges,” Allaire said.
In January, Circle published its first annual report on the development and prospects of the USDC economy.