Circle CEO Supports Plans to Regulate Stablecoin Issuers as Banks

Jeremy Allaire, the Chief Executive Officer (CEO) of stablecoin issuer, Circle said he supports the recent recommendations from the Biden administration to regulate the company and related firms like banks. Under the new proposal which was published earlier this month, the president’s Working Group on Financial Market’s urged lawmakers to mandate that only banks can issue stablecoins.

Circle has been applying for a license to operate as a bank, with Allaire saying the proposal is an indication that stablecoins have been conceived as a financial force that can grow remarkably in the near future.

“We’re supportive of that recommendation. We think [this] represents significant progress in the growth of this industry,” Circle CEO Jeremy Allaire told Yahoo Finance. “There’s a real recognition that as these payment stablecoins grow, they could grow at internet scale relatively quickly.”

Stablecoin is digital tokens whose prices do not fluctuate like Bitcoin (BTC), Ethereum (ETH), and other altcoins. Circle is the issuer of USDC, the stablecoin that is second only to Tether and has a market capitalization of $34.4 billion. Stablecoins are used in trade settlements, and in facilitating lending transactions. The major fear of regulators is that it will lead to depleting reserves in FDIC-insured banks, creating a serious challenge for the financial system.

Circle CEO Says the Firm is Modeling Banking Infrastructures

Allaire said part of the fundamental pursuits of Circle is to build the right infrastructures to model a full-fledged bank as it looks toward a regulated future.

“We’re really upgrading this to a much more fundamental infrastructure at the core of what potentially the future of banking and payments and capital markets looks like,” he said.

While the Working Group’s proposal appears to be more favorable for banks and institutions with a banking charter, Allaire said he is unperturbed as Circle and existing crypto stablecoin issuers have more technical knowledge of the digital currency ecosystem than banks.

“The banks are, frankly, scrambling to begin to understand this,” said Allaire. “I think frankly, they’re very much going to take a wait and see approach on this. Until there’s specific new rules, they’re very likely to avoid trying to do this directly.”

Despite the proposed regulations push under consideration, the Circle CEO believes the technicality of a banking charter will have to be redesigned by all the relevant parties.