Jeremy Allaire, CEO and co-founder of Circle, the firm behind the popular stablecoin USD Coin (USDC), said there is a strong likelihood that United States lawmakers will pass laws that regulate stablecoins this year.
According to Allaire, the U.S. government is taking a more accepting stance on crypto, as crypto-related regulations are gaining traction in various parts of the world. He said the U.S. Treasury, Federal Reserve and both chambers of Congress have all signaled a desire to introduce stablecoin regulations.
“Digital dollars are happening around the world, other governments are regulating dollar-digital currencies before the United States. And so I think there is a very strong desire to act and assert U.S. leadership and get the right consumer protections involved,” Allaire said in an interview with CNBC during the World Economic Forum in Davos, Switzerland, on Monday.
It’s been a really powerful time for that and we think 2024, with things like the spot ETF and world regulatory clarity, is going to open this up even wider.
Jeremy Allaire, CEO and co-founder of Circle.
Stablecoins like USDC are relatively stable crypto coins tethered to a fiat currency’s value, serving to bridge fiat trading and cryptocurrencies. Stablecoins comprise a major part of the crypto market, with its market cap currently amounting to more than $130 billion.
The development of the U.S. crypto regulatory stance is also reflected in the U.S. Securities and Exchange Commission’s (SEC) recent approval of Bitcoin exchange-traded funds (ETFs) for 11 issuers. Following this development, Circle unveiled that it filed for an initial public offering (IPO) after its first attempt to go public in 2021 failed due to failing SEC’s requirements.
Allaire refused to comment on whether the company’s confidential bid to go public was correlated with the SEC’s spot ETF approval, citing regulatory restrictions. However, he expressed his hope for more regulatory developments to follow the recent SEC milestone.
Stablecoin law on the horizon
Circle has been pushing for stablecoin regulations in the past few years and has reportedly spent about $760,000 on its lobbying efforts. These efforts may yet see fruition, as Allaire remains optimistic that previously-introduced bills will be enacted this year.
One of these proposed regulations is the Clarity for Payment Stablecoins Act. In July last year, the bill was advanced by the House Financial Services Committee.
The Clarity for Payment Stablecoins Act is now being reviewed and awaits approval by the House of Representatives and the Senate. The bill aims to place stablecoin issuers under a similar regulatory framework to that for traditional financing firms.
Prior to that, the Stablecoin Transparency Act was also introduced to Congress in March of 2022. The introduced bill aims to set a transparency standard for the stablecoin market and improve consumer protection by requiring issuers to report their crypto reserves.
According to Dante Disparte, Circle’s chief strategy officer, U.S. lawmakers may still have reservations about advancing regulations for crypto and stablecoins, particularly due to the potential of stablecoins being used to facilitate criminal activity such as funding for terrorism.
Disparte echoed Allaire’s optimism that 2024 is likely to be the year for stablecoin laws to be adopted.
“I remain optimistic that payments stablecoin policy is a possibility early in the new year. And that is increasingly a bipartisan reality, in no small measure,” Disparte said.