SEC Shouldn’t Regulate Crypto Stablecoins, Says Circle CEO

[Hydrogen]

Circle chief Jeremy Allaire has reacted to the recent spree of enforcement actions by the US Securities and Exchange Commission (SEX) and other agencies in the crypto industry. In an interview with Bloomberg, the Circle boss shared his views regarding SEC’s recent moves on BUSD stablecoin issuer Paxos.

Circle, a Boston-based firm, is the issuer of the second-largest stablecoin, USD Coin (USDC), with more than $42 billion in circulation. In the interview, its chief exec, Jeremy, suggested that USD-pegged stablecoins should be under a bank regulator.

SEC Has No Business With Crypto Stablecoins

During the interview, Circle’s chief executive officer Jeremy Allaire stated that the US SEC has no business with payment stablecoins. According to him, stablecoins are a payment system and should fall under the regulatory jurisdiction of a banking regulator and not the SEC.

The executive seems displeased with the SEC’s recent moves on stablecoins. In his words, several countries’ governments, including the US, have a reason for addressing stablecoins as a payment system that falls under the responsibility of banking regulators.

Although the Circle chief shares this view, his firm confirmed it has not come under the SEC’s radar. However, given the recent desist notice to Paxos and other ongoing regulatory activities, a move on Circle by the SEC is possible.

Although the CEO was against the SEC’s move on the stablecoin, he favored the regulator on one thing. Jeremy applauded the SEC’s recent proposal on crypto custody to streamline exchanges who want to become custodians.

In his words, it is crucial to have qualified custodians that can provide appropriate market control structures and bankruptcy protections. Therefore, a crypto exchange should not wake up and become a custodian without meeting the requirements.

SEC Accused Of Pushing Enforcement Forcefully

Also, earlier on February 23, Allaire concurred with SEC Commissioner, Hester Peirce, who said the watchdog should refer to Congress regarding legislation for crypto regulation and enforcement.

In a tweet, Peirce commented on people’s reactions to the SEC and its moves on stablecoins. According to the commissioner, Congress is actively considering the issue of crypto regulatory framework and legislation, so the SEC should turn to them for answers. He also said the SEC and other regulators could hold public roundtables to discuss the matter. Pierce ended his note by saying there are better ways to make rules than enforcement actions.

Allaire’s views align with many others who reacted to the SEC’s recent actions on the crypto industry. Due to the lack of legislation for crypto regulation, many believe the SEC needs to consult Congress before taking matters into its hands regarding cryptocurrency enforcement.

Responding to the ongoing lawsuit between the SEC and a former Coinbase employee, the Chamber of Digital Commerce lambasted the watchdog. The agency accused the SEC of using a back door approach to label crypto assets securities without legislation from Congress.

https://bitcoinist.com/sec-shouldnt-regulate-crypto-stablecoins/

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Interesting conflict developing here. Circle has its $42 billion dollar stablecoin (USDC) which could come under fire if the SEC continues to regulate the stablecoin market.

The SEC claims all crypto assets other than bitcoin are securities. Circle's CEO claims that they should be regulated under the banking industry or congress. And that Congress must officially label assets securities before they can be treated as such.

There is a long story and history behind all of these events. Currently the united states has proposals on the table to expand the powers of the SEC and grant it greater authority.

BTW does anyone remember who circle is said to function as a subsidiary of?

[1715685964]

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[EarnOnVictor]

This is another person trying to put things in disarray, the so-called Circle chief should just close his mouth, I don't know why people like to call a white a black. SEC is saddled with that responsibility, not the bank, or he would argue that stablecoins are more stable than fiat in which 1 fiat = 1 fiat. If SEC could regulate the trading of fiat, I don't see any reason why they should not regulate the stablecoins that are only using the principles of fiat, some of them are not even truly equal to 1$ as they claim.

Aside from that, they are pairable and tradable, so why not regulate them? We should not be sentimental, regulation is not banning, and it will only help preserve cryptocurrency rather than some evil government clamping down on it.

[Ucy]

I hope they understand what they are asking for. If you want to be regulated by Banking Regulator, the regulator will likely subject you to the standards banks are subjected to. And It will become almost impossible to operate the way true crypto should operate. And your customers will likely find it difficult to use the stablecoin like normal cryptocurrency. This is part of the reasons I usually advice against centralization of crypto or allowing it in a decentralized system to compete/exist side by side with decentralized ones. If for example the stablecoin companies all of a sudden are taken over by banks or operate as banks, people who deposited longterm thinking they have full control of their funds (considering the private/secret keys), could have hard time accessing their funds easily unless they are Americans.

We need credible stablecoins that are really decentralized. They will most likely be self regulatory and/or regulated by decentralized network participants. Centralized ones normally should by regulated by countries that support them or countries they fall under their jurisdiction

[davis196]

So basically this guy(and other CEOs in the crypto business) claims that cryptocurrencies are actual currencies and the crypto companies should be treated as banks by the authorities. The term "payment systems" doesn't mean anything, if you ask me.
The authorities are stating that cryptocurrencies are NOT actual currencies. The cryptocurrencies are financial assets/securities and the crypto companies should be regulated by the SEC.
I don't think that a stablecoin should be treated as a real currency. Stablecoins are more like pseudo-currencies. They aren't completely crypto, but they aren't completely fiat as well.
I don't know why the Circle CEO is complaining. The big centralized crypto companies must be regulated strictly. It doesn't matter which institution is going to regulate them-SEC or the congress.

[lumbridgecity]

Stable coins are nothing but a smart rich man grabbing money from the transaction fees -
government has realized this money stream is 'supposed' to be theirs...
they will soon have their own digital currencies and will act as their own 'stable coins'.

in the short term for 2023, all that money sitting in stable coins might pump altcoins in a bigger swell than we saw in 2017 and 2018.

[DeathAngel]

I think proof of reserves is a good idea but I’m not too sure about total regulation. Tether for example has proven time & time again that they are legit & very much solvent.

We can look at what happened this year with the LUNA-UST peg as reason why regulation could be important. I’d be behind it if the SEC was doing it for the right reasons but they’re not. Look at their relationship with SBF & FTX for example.

[avikz]

Regulation is usually not good, especially for cryptocurrency market. However, when it comes to stablecoin, I would support the regulation because that would essentially force the issuers to establish proof of reserve. That will help to bring back trust into the stable coin market.

Since stablecoins are not decentralised, regulations might be needed to ensure that user's get the assurance of trust!

[el kaka22]

To be fair Circle CEO would say something like that, it is not really a shocking information. Obviously we are talking about something that is a bit more difficult to handle, it is not going to be as easy, or as acceptable for someone in the crypto world, specially for someone who is CEO in a crypto industry company.

However, SEC will consider it as very important problems because we are talking about some random companies issue their own dollars and selling it to people, that's a bit weird. I mean if I just printed my own paper money, and distributed, and said "this worths a dollar, if you need it come back to me and take your dollar" would you buy from me? You do it from tether though?

[tvplus006]

...The SEC claims all crypto assets other than bitcoin are securities. Circle's CEO claims that they should be regulated under the banking industry or congress. And that Congress must officially label assets securities before they can be treated as such. ..

The words of Circle CEO Jeremy Allaire will have legal consequences only if he can prove it in court or a corresponding law is passed. And if the SEC does not stop Paxos, then Circle may be next, since the SEC will not stop in its desire to control the cryptocurrency market.

[Yaunfitda]

What do you expect? this guy has some narrative behind to say what he wanted to say because obviously he his company has a lot of stable coins.

Regulation is usually not good, especially for cryptocurrency market. However, when it comes to stablecoin, I would support the regulation because that would essentially force the issuers to establish proof of reserve. That will help to bring back trust into the stable coin market.

Since stablecoins are not decentralised, regulations might be needed to ensure that user's get the assurance of trust!

Really depends as you says, like Tether who has been in the limelight since 2018, and they don't want to be scrutinized or something.
https://www.cftc.gov/PressRoom/PressReleases/8450-21

Washington, D.C. — The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Tether Holdings Limited, Tether Limited, Tether Operations Limited, and Tether International Limited (d/b/a Tether) for making untrue or misleading statements and omissions of material fact in connection with the U.S. dollar tether token (USDT) stablecoin. The order requires Tether to pay a civil monetary penalty of $41 million and to cease and desist from any further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged. 

So this is going to be a cat and mouse game for regulators and stable coins in the future.

[jacafbiz]

I think Circle and some of these US companies have shot themselves in the foot, initially, there are indications they are working against the interest of non-US companies, where were they when the SEC was waging war against Tether and recently Binance, they kept quiet because it benefits they own interest and now that the hammer is now swinging on anyone the team starts to cry out. I do believe that the SEC people are overreaching and it is damaging the space, SEC needs to come out with clarity on where they stand with some issues so that the industry can move on, the earlier they do, the better it is for everyone one

[zasad@]

BTW does anyone remember who circle is said to function as a subsidiary of?

When a law needs to be passed in the crypto-currency world, the regulators pass this law and the next day, in fact, explain the reasons. The Sec will regulate whatever it wants, which is why I most of all perceive such articles as useless rhetoric.
__
Circle according to some experts, like Goldman Sachs, belongs to the Rothschild group.

[cryptoaddictchie]

Only if there are potential risk for some institutional investors like what happened on ust of Terra. Well cant blame them for such incident as many people loss their money for that crap. Now they are being strict on stablecoins implementing proof of reserve but sometimes their thoughts isnt compatible with the decentralized aspect of crypto. Anyone has their freewill to speak or voice out their suggestion but it must be reviewed many times over. Thats why some articles serves as fud to market due to their irresponsible dissemination of info.

[sana54210]

The SEC claims all crypto assets other than bitcoin are securities. Circle's CEO claims that they should be regulated under the banking industry or congress. And that Congress must officially label assets securities before they can be treated as such.

There is a long story and history behind all of these events. Currently the united states has proposals on the table to expand the powers of the SEC and grant it greater authority.

When we are talking about decentralized coins like bitcoin, then I agree that SEC should have absolutely no regulations over it at all because it's decentralized and belongs to all of us.

However, if we take Tether for example, I agree with others that there is a winner there, there is a company that makes profits, I do not make any profits at all by just having USDT, but they are making a profit by holding my USD, which means that they are a company that focuses on profits, why wouldn't SEC consider them as such? Just like apple sells phones, and tesla sells cars, Tether sells USDT to people and should be regulated the same way, I disagree with the CEO on this one.

[Oneandpure]

After USDC dropping seems need regulation with stable coins and SEC commission here has important thing how to adopt with stable coins regulation, but there are have acceptable reason why USDC price yesterday was going drop because the internal and bankrupt with one bigger Bank in United State and several member there saving assets in USDC.

Indeed whatever reason made USDC dropping I think SEC commission need to make new regulation based on their zone how effective for their citizen not loss yet when investing or holding assets in stable after learning with USTC dropped drastically. Nowadays not safety when holding fund in stable coins after many time stable coins price is not stable.

[ANSEL_2.0]

If SEC has no power over DAI stable coin for example, then all other stablecoins should learn from this and go decentralized, I am still waiting on the SEC's action against decentralized projects, I doubt it's going to be a thing, or do you think I am wrong? Projects that are called security by SEC are all centralized projects.

[tygeade]

After USDC dropping seems need regulation with stable coins and SEC commission here has important thing how to adopt with stable coins regulation, but there are have acceptable reason why USDC price yesterday was going drop because the internal and bankrupt with one bigger Bank in United State and several member there saving assets in USDC.

Indeed whatever reason made USDC dropping I think SEC commission need to make new regulation based on their zone how effective for their citizen not loss yet when investing or holding assets in stable after learning with USTC dropped drastically. Nowadays not safety when holding fund in stable coins after many time stable coins price is not stable.

I think stablecoins do need a regulation just because they are stablecoins, but not crypto ones, there is a big difference there. I understand why stablecoins could need regualtions because we have seen how USDC dropped and there were a lot of people who lost a lot of money on that, which is what Circle CEO was worried about as well, they just don't want government regulations to disrupt their good profits, they do not want to be responsible for anything extra and they want to keep profiting the way they have.

However, crypto currencies are decentralized, these stable ones have owners and this CEO type of people make all the profit in the world thanks to no regulations.

[o48o]

-cut-
The SEC claims all crypto assets other than bitcoin are securities. Circle's CEO claims that they should be regulated under the banking industry or congress. And that Congress must officially label assets securities before they can be treated as such.

There is a long story and history behind all of these events. Currently the united states has proposals on the table to expand the powers of the SEC and grant it greater authority.

BTW does anyone remember who circle is said to function as a subsidiary of?

I refuse to think that in SEC they wouldn't understand how anything works so i am assuming that at some point someone misunderstood something and printed it out. Because what logic that even has? Do they mean all the coins that had an ICO or sale and do they think that every coin out there but bitcoin had a sale at some point?

I am baffled about this and would like to read from an actual source rather then outbursts from annoyed exchange ceos because nothing on this doesn't make any sense.

[Captain Corporate]

SEC is not just the top officials that are old, there are some young people working under them, plenty of staff and there are even interns to ask. They won't make decisions based on what those young people say of course, but they can ask and they will ask, the always do. When they get the understanding of it, they will make a decision based on that. I agree with most others, if you are a company who created a fake dollar, and sell that to people then I am sorry but you should be regulated. What kind of power does Circle CEO wants where they can print as much fake dollars as they want and tell people to give their real dollars in exchange of this fake dollar? This has to be not only regulated, but also looked at very carefully, VERY carefully.

[Cryptoababe]

I think SEC are only meant to regulate crypto exchanges. USDC is a stable coin and it serve as a security enough. But SEC is now trying to regulate almost everything. Well, Seems they once accused of BUSD not security.