Jeremy Allaire, the founder and CEO of Circle Internet Financial, has criticized the United States Securities and Exchange Commission (SEC) for its recent moves to regulate the crypto industry, including its focus on stablecoins.
In an interview with Bloomberg on February 24, Allaire argued that the SEC is not the appropriate agency to regulate stablecoins and that dollar-pegged “payment stablecoins” should instead be under the oversight of a banking regulator.
There is a reason why everywhere in the world, including the U.S., the government is specifically saying payment stablecoins are a payment system and banking regulator activity.Jeremy Allaire
SEC’s focus on stablecoins
Stablecoins are one of the targets of the Securities and Exchange Commission’s (SEC) recent crackdown on the cryptocurrency industry.
The agency is looking into whether or not stablecoins, which are digital currencies that keep their value at $1, are among the items that were issued in contravention of rules designed to protect investors.
The agency has informed Paxos Trust Co. that it plans to take enforcement action over its stablecoin, BUSD. Coinbase Global Inc. has also disclosed that the SEC is investigating its stablecoin product, and Circle Internet Financial has disclosed that it, too, faces an SEC investigation.
Allaire argued that “payment stablecoins” are a payment system and banking regulator activity, and that the SEC should not be regulating them.
He stated that everywhere in the world, including the U.S., the government has been specifically saying that payment stablecoins should be under the oversight of a banking regulator.
While Allaire was critical of the SEC’s focus on stablecoins, he was generally in favor of a recent SEC proposal on crypto custody that would make it much harder for exchanges to become custodians.
We think having qualified custodians that can provide the appropriate control structures and bankruptcy protections and the other things is a very important market structure and very valuable.Allaire
He stated that having qualified custodians that can provide the appropriate control structures and bankruptcy protections is a valuable market structure.
How Circle’s stablecoin has been doing
Circle is the company that is responsible for the creation of USD Coin (USDC), which is the second-largest stablecoin in the world. USD Coin (USDC) has a total supply of $42.2 billion and a market share of 31%.
According to CoinGecko, Tether continues to be the most popular stable cryptocurrency due to its supply of $70.6 billion and its market share of 52%.
In spite of the investigation by the SEC, Circle is planning to increase its headcount by as much as 25 percent, breaking the overall trend of layoffs in the cryptocurrency industry. However, a spokesperson for Circle declined to comment on the investigation’s focus or its current state.
On February 23, Allaire expressed agreement with the statement made by SEC Commissioner Hester Peirce, who said that the agency ought to consult with Congress.
Some people believe that the Securities and Exchange Commission has been taking matters relating to crypto rules and enforcement into its own hands because of the lack of law.