USDC Circle Boss Jeremy Allaire: SEC Should Not Set Stablecoin

JAKARTA - Jeremy Allaire, CEO of Circle, told Bloomberg on February 23 that the US Securities and Exchange Commission should not be responsible for organizing stablecoins.

In an interview with the publication, Allaire stated that the government should consider stablecoin as a payment system and banking regulator activity, not as a security that must be regulated by the SEC.

While he admits that there are many stablecoin variants and not all of them are created the same, Allaire states that most regulators regard stablecoins as payment systems. This implicitly excludes stablecoins from classification as securities.

Allaire also expressed its support for separate SEC regulations, which could enforce stricter rules surrounding cryptocurrency storage.

He stated that eligible custodial rules would provide "exact" control and protection against bankruptcy. Allaire added that many lessons can be learned from random exchanges that have user assets.

Allaire's statement comes after the SEC's famous action against stablecoins. On February 13, Paxos announced that it would stop issuing Binance USD (BUSD) at the request of New York regulators.

The SEC then sent a separate Wells notification to Paxos. Rumors later emerged that Circle had also received a similar notification, but the rumors were firmly denied by Circle.

The SEC also took action against the TerraUSD stablecoin and related assets on February 16. The value of TerraUSD was algorithmically determined by crypto assets and lost most of its value in May 2022. In contrast, Circle's Binance USD and USD Coin (USDC) were supported by traditional assets and maintained a 1-dollar benchmark.

SEC chairman Gary Gensler has repeatedly suggested that stablecoins be under regulator's jurisdiction. He also compared stablecoins to MONEY chips by the end of 2021. Currently, Circle's USDC stablecoin has a 42 billion market cap (equivalent to IDR 639 trillion) and is the second largest stablecoin after Tether's USDT, which has a market capitalization of USD 70 billion (approximately IDR 1 quadrillion).