The head of government work at financial technology company Circle, Dante Disparte, recently published a set of 19 principles for stablecoin regulation.
The move comes in line with Circle’s growing efforts to shape the United States’ stablecoin regulations. Though the stablecoin regulation has always been a hot topic among regulators around the world, it has become a serious agenda for them following Terraforms Labs’ stablecoin Terra’s (UST) depegging disaster in May.
Bringing real world experience operating #USDC to bear, Circle sets forth policy principles as guideposts for best-in-class accountability standards at a critical moment for U.S. policymakers to act. https://t.co/l4UOnQl9CI
— Circle (@circle) July 18, 2022
For those who have been following the discussion on stablecoin issuance, many of the principles listed by Disparte—privacy, continued issuance by non-banks, and coexistence with a potential central bank digital currency (CBDC)—are fairly well familiar. Notably, the global financial technology company Circle is the issuer of the second-largest stablecoin after USDT, USDC, which has a total supply of $45 billion.
Dante stated that stablecoin regulation should “promote the development of supervisory, risk, and operational frameworks for multiple issuers of the same stablecoin standard.”
“The preservation of bank and non-bank dollar digital currency issuance promotes competition, a level playing field, and rules-based upgrades in the financial system. Bank-like risks should be addressed with scale-appropriate bank grade levels, including asset liability management, operational and enterprise risk management considerations.”
Disparte wrote regarding a crucial point in the stablecoin policy discussions, non-bank issuance
In December, Disparte testified before the Senate regarding the situation of stablecoins. At the time, he was already promoting a similar comprehensive strategy for stablecoin regulation, which has been heavily demanded by the sector.
Circle CEO supports regulators
The Treasury, on the other hand, has advocated limiting issuance to “insured depository institutions,” which are typically banks. Jeremy Allaire, the CEO of Circle, has also frequently appeared in congressional hearings on cryptocurrencies.
As TheCoinRise reported, Alaire stated in November 2021 that he agreed with the Biden administration’s recommendations to regulate the company and comparable businesses like banks. The president’s Working Group on Financial Markets encouraged lawmakers to mandate that only banks can issue stablecoins under that proposal, which was issued earlier in the same month.
The company has recently joined hands with financial technology company Paxos as stablecoin issuers that disclose the specific Treasury securities they hold in reserves.
