Circle, the issuer of the world’s second-largest stablecoin USDC, feels “confident” that stablecoins will become mainstream money. Simultaneously, regulations should be harmonized globally to ensure compliance for all payment stablecoin issuers.
“Circle is confident that there will be mainstream adoption of stablecoins as the money for the internet age,” Dante Disparte, chief strategy officer and head of global policy at Circle, told Cointelegraph in an exclusive interview.
“We expect there will be internet payments firms and other financial services companies that (will) attempt to enter or to expand in this space, which is a strong signal that stablecoins are here to stay,” Disparte pointed out.
However, Disparte feels it is equally important that rules and regulations be harmonized globally. He said that the essential principles of conservative reserving and financial crime compliance should be applied equally to any company claiming to issue a payment stablecoin.
Circle moves to New York
Disparte’s comments come as the stablecoin issuer prepares to move its global headquarters to New York by early 2025 after filing for an initial public offering (IPO) in January.
Disparte pointed out that the US framework empowers state banking and money transmission supervisors to develop and regulate the payments industry at the state level. Other countries regulate payments or electronic money (e-money) activities at a national level.
Related: US stablecoin bill to ‘cement’ dollar dominance, fight sanction evasion
“A key question now is whether the US will finally enact federal stablecoin rules or maintain the status quo of uncertainty, which policymakers in both US political parties say is unacceptable,” Disparte said. He explained:
“The absence of a US regulatory framework for dollar-referenced stablecoins represents a threat to American interests. This vacuum could incentivize the creation of products that exploit trust in the dollar while bypassing US regulations, potentially becoming a refuge for illicit actors.”
Federal legislation for payment stablecoins is essential to promote safe competition for how Americans send, spend, save, and secure their money in an increasingly technology-dependent market, according to Disparte.
What are stablecoins, and how do they work? Source: Youtube.
The stablecoin bill, advanced by the House Financial Services Committee in July 2023 has generated significant policy momentum and support, he said.
“Congress should approve such a bill on a bipartisan basis, and the President should sign it if it comes to his desk. The legislation would create a floor for all issuers to comply with US anti-money laundering, countering terrorist financing and sanctions obligations,” Disparte said.
He added that these norms should be applied to US issuers of payment stablecoins, as well as their international counterparts, many of whom are being licensed to issue dollar-denominated stablecoins from jurisdictions including the EU and UAE.
Will EU’s MiCA 2.0 fill gaps in the regime?
The European Union’s Markets in Crypto-Assets Regulation (MiCA) came into partial effect in June, with new rules concerning stablecoins coming into force on June 30.
On July 1, Circle said it had become the first global stablecoin issuer to achieve compliance with the MiCA regulatory framework after it got the Electronic Money Institution (EMI) license from the French banking regulatory authority. Circle’s USDC (USDC) and EURC are regulatory compliant under the new rules.
Related: MiCA laws come into effect in Europe — Here’s what you need to know.
“With MiCA, Europe succeeded in doing what other jurisdictions, including the U.S., have yet to achieve: provide legal and regulatory clarity for not one piece of the digital asset market, but all of it,” Disparte said. However, he pointed out:
“Like all novel rules or comprehensive regulations, MiCA is imperfect, and in places overly prescriptive, so much so that EU policymakers are already contemplating MiCA 2.0, which would potentially fill certain gaps in the regime, such as non-fungible tokens, decentralized finance and other areas.”
Stablecoin market sees increasing competition
Competition in the stablecoin market is heating up with new entrants like PayPal’s USD-pegged stablecoin, PayPal USD (PYUSD), which has already surpassed $1 billion in market cap. Ripple Labs has started testing its USD-pegged stablecoin, Ripple USD (RLUSD), on both the XRP ledger and Ethereum, and it plans to expand to more blockchains.
Tether’s USDT remains the largest stablecoin with a market cap exceeding $118 billion, according to data from CoinMarketCap. Tether has also announced plans for a new stablecoin pegged to the UAE dirham (AED).
Stablecoins: How the most stable cryptocurrencies could collapse the entire market. Source: Youtube.
On Aug. 26, the market cap for stablecoins, excluding algorithmic ones, reached a record $168 billion. The market hit an all-time high of $167 billion in March 2022 but fell to $135 billion by the end of that year.
“We invite any competitors to come to America, the EU, Singapore, and beyond, to submit themselves to a vigorous licensing process, to follow the same standards that are the bedrock of our company, and to join us as regulation-first, compliant companies so that this ecosystem can grow and thrive long into the future,” Disparte added.
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