CEO Of Circle Urges US Government To Regulate Stablecoins So They Don't Be Left Behind By Other Countries

JAKARTA - Jeremy Allaire, CEO of Circle, has issued calls for stablecoin regulation to safeguard the country's sovereignty over digital dollar issuance. In a hearing at the congress, Allaire highlighted that many other countries have introduced frameworks and regulations to issue stablecoins backed by the US dollar, while the US is still lagging behind in this regard.

"We see governments in various countries such as the European Union, Britain, Japan, Hong Kong, Singapore, and others have actively determined regulations regarding the issuance and operations of digital dollars in their markets, which are certainly surprising," Allaire said.

Allaire said the consequences could be detrimental if there were no clear regulations, especially in maintaining the competitiveness of the US dollar in the digital era. Allaire repeated his call to act on social media, saying, "Now is the right time to take action."

Circle is the company behind USD Coin (USDC), the second largest stablecoin in the crypto market with a market cap of 28.3 billion US dollars (Rp424 trillion). In March, USDC experienced a depegging event (cutting ties or fixed ties between the two currencies) due to the failure of Silicon Valley Bank (SVB), which has 8.8 percent or about 3.3 billion US dollars (equivalent to Rp49 trillion) of total reserves supporting USDC.

However, the depreciation was successfully canceled following the announcement that all SVB deposits would accept full payments. At that time, Allaire stressed the importance of introducing clear rules to prevent similar incidents and advocate "digital currency banking with full reserves separating the basic layers of digital money and payment systems from the risk of fractional reserve banking."

Stablecoin has become an important part of the cryptocurrency market, with its rapidly increasing use. According to data from Kaiko, a cryptocurrency market data provider, the current use of stablecoins accounts for 76 percent of total cryptocurrency transactions, an increase of 16 percent since early 2022.

On June 8, the chairman of the US House of Representatives' Financial Services Committee, Patrick McHenry, released a new bill on stablecoin regulations, showing efforts to regulate and oversee the sector.