USDC issuer Circle has declared support for the Presidential Working Group on Financial Markets’ proposal to regulate fiat-backed cryptocurrency issuers like banks, stating that the move would foster ecosystem growth.
Jeremy Allaire, CEO of Circle, told Yahoo Finance that it is imperative to regulate stablecoin issuers because the growth of such tokens could see the asset class widely adopted by many.
“We’re supportive of that recommendation. We think [this] represents significant progress in the growth of this industry,” Allaire said.
Stablecoins Regulation Proposal
Circle’s CEO comment comes weeks after the United States president’s Working Group on Financial Markets proposed that Congress should regulate stablecoins like banks.
The major focus of the regulatory committee is to curtail any form of risk that stablecoins pose to the existing financial system.
Although stablecoins were initially developed to be used in the cryptocurrency market, there is a possibility that the asset class could be adopted by households and businesses as a payment method, especially now that interest in crypto rises.
Should stablecoins become a widely accepted legal tender, the committee warned that a substantial amount of money might be transferred out of FDIC-insured banks, with strong ramifications for credit creation.
Based on their fears, the committee recommended that lawmakers should establish laws whereby only FDIC-insured banks will have the right to issue stablecoins going forward.
According to Jelena McWilliams last month, FDIC chair regulators should ensure that stablecoin issuers have reserves available on-demand to satisfy users’ withdrawal requests, especially for a big issuer that poses a threat to the financial system.
Allaire Agrees With the Recommendations
Reacting to the proposal by the presidential committee, Allaire noted that looking at the volume of stablecoins in circulation and the number of transactions completed with the asset class, its risks to the global financial market become an important topic of discussion.
Allaire added that the company is upgrading its stablecoin – USDC – to align with the fundamentals of the future of banking, payments, and the capital market.
Circle is yet to file for a national charter bank application. However, the company is considering opting for FDIC insurance to prepare itself should lawmakers rule that only FDIC-insured banks will issue stablecoins.
Circle is currently in talks with relevant authorities, Allaire disclosed.
“We expect this to be a process where we work kind of hand-in-hand with regulators on this,” he said.