The USDC Circle issuer has declared its support for the Presidential Financial Markets Task Force’s proposal to regulate fiat-backed cryptocurrency issuers like banks, saying the move would promote the growth of the ‘ecosystem.
Jeremy Allaire, CEO of Circle, told Yahoo Finance that it is imperative to regulate stablecoin issuers because the growth of such tokens could see the asset class widely adopted by many.
“We support this recommendation. We think [this] represents a significant step forward in the growth of this industry, ”said Allaire.
Stablecoins Regulation Proposal
Circle’s CEO comment comes weeks after the United States president’s Working Group on Financial Markets proposed that Congress should regulate stablecoins like banks.
The main objective of the regulatory committee is to reduce any form of risk that stablecoins pose to the existing financial system.
Although stablecoins were initially developed to be used in the cryptocurrency market, there is a possibility that the asset class could be adopted by households and businesses as a payment method, especially now that interest in crypto rises.
If stablecoins became widely accepted legal tender, the committee warned that a substantial amount of money could be transferred out of FDIC-insured banks, with strong ramifications for creating credit.
Based on their fears, the committee recommended that lawmakers should establish laws whereby only FDIC-insured banks will have the right to issue stablecoins going forward.
According to Jelena McWilliams last month, FDIC regulators should ensure that stablecoin issuers have reserves available on demand to meet user withdrawal requests, especially for a large issuer that poses a threat to the financial system.
Allaire Agrees With the Recommendations
Reacting to the proposal by the presidential committee, Allaire noted that looking at the volume of stablecoins in circulation and the number of transactions completed with the asset class, its risks to the global financial market become an important topic of discussion.
Allaire added that the company is upgrading its stablecoin – USDC – to align with the fundamentals of the future of banking, payments and the capital market.
Circle is yet to file for a national charter bank application. However, the company is considering opting for FDIC insurance to prepare in case lawmakers decide that only FDIC-insured banks issue stablecoins.
Circle is currently in talks with relevant authorities, Allaire disclosed.
“We expect this to be a process where we kind of work hand in hand with regulators on this,” he said.
