Circle Expects Stablecoins to Dominate Payments
16 Sep, 2024 ● أخبار العملات المشفرة
Circle, the issuer of USDC, the world's second-largest stablecoin, is “confident” that stablecoins will become mainstream forms of money.
At the same time, the company emphasizes the need for global harmonization of regulations to ensure compliance for all stablecoin issuers.
“Circle is confident that there will be mainstream adoption of stablecoins as the money for the internet age,” Dante Disparte, Circle's chief strategy officer and head of global policy, said in an exclusive interview with Cointelegraph.
“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 added.
However, Disparte stressed the importance of having globally harmonized rules and regulations.
He argued that the essential principles of conservative reserving and financial crime compliance should be consistently applied to any company issuing a payment stablecoin.
Disparte’s remarks come as Circle prepares to relocate its global headquarters to New York by early 2025 after filing for an initial public offering (IPO) in January.
He noted that the U.S. framework allows state banking and money transmission supervisors to regulate the payments industry at the state level, whereas other countries regulate payments or electronic money (e-money) at a national level.
“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 stated.
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.”
Disparte argues that federal legislation for payment stablecoins is crucial to ensure safe competition for how Americans send, spend, save, and secure their money in an increasingly technology-driven market.
The stablecoin bill advanced by the House Financial Services Committee in July 2023 has gained significant policy momentum and support, according to Disparte.
“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 standards should be applied not only to U.S. issuers of payment stablecoins but also to their international counterparts, many of whom are being licensed to issue dollar-denominated stablecoins from jurisdictions like the EU and UAE.
The European Union’s Markets in Crypto-Assets Regulation (MiCA) came into partial effect in June, with new stablecoin rules taking effect on June 30.
On July 1, Circle announced it had become the first global stablecoin issuer to achieve compliance with the MiCA regulatory framework after obtaining the Electronic Money Institution (EMI) license from the French banking regulatory authority
Circle’s USDC and EURC are compliant under the new rules.
“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 also 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.”
The stablecoin market is becoming increasingly competitive with new entrants like PayPal’s USD-pegged stablecoin, PayPal USD, which has already surpassed $1 billion in market cap.
Ripple Labs has also started testing its USD-pegged stablecoin, Ripple USD (RLUSD), on both the XRP Ledger and Ethereum, with plans to expand to more blockchains.
Tether’s USDT remains the largest stablecoin with a market cap of over $118 billion, according to CoinMarketCap.
Tether has also announced plans to launch a new stablecoin pegged to the UAE dirham (AED).
On August 26, the market cap for stablecoins, excluding algorithmic ones, reached a record $168 billion.
The market had 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.
Sources:
https://cointelegraph.com/news/circle-predicts-stablecoins-mainstream-global-regulations
