Stablecoin issuers such as USD Coin (USDC) and Tether (USDT) may likely be compelled to operate under the same rules as banks, but the CEO of USDC issuer Circle seemed unconcerned about the prospect of being subjected to such laws. Circle CEO Jeremy Allaire expressed his support for the Biden government’s intention to operate a bank-like regulatory framework for stablecoin issuers in a statement released today. He emphasized that the Federal Reserve’s proposal to oversee greenback stablecoin issuers in the U.S. Banking system as financial institutions at the federal level constitutes a significant step forward for the industry’s development.
He added that the present steps will elevate the existing money transmission-focused laws to a far more essential structure at the heart of what could be the trend of money and financial markets. In Allaire’s opinion, “there’s a strong realization that as these transaction stablecoins gain in popularity, they have the potential to scale up to internet scale quite soon.” When the stablecoin market is growing to hundreds of billions of Dollars in circulation and trillions of Dollars in operations, the threats to economic markets and monetary stability become significantly more significant, he continued.
As part of this proposal, the Biden presidency seeks to establish a new “special-purpose charter” for stablecoin issuers, placing them in the same class as financial institutions. Allaire believes that the specifics of a bank charter for a cryptocurrency corporation may need to be worked out over time with the Federal Deposit Insurance Corporation (FDIC) and other regulatory authorities that monitor banks. Stablecoins have emerged as a major topic of discussion among authorities. According to reports, the United States Treasury held a series of meetings in September to investigate the risks that stablecoins pose to users, markets, and the financial system.
The Biden Administration Bank-Like Restrictions For Stablecoin Issuers
Concerns arose over the fate of crypto governance in the United States after reports that the Biden administration was developing a new legislative structure for stablecoin issuers. The Wall Street Journal revealed in October that the government is trying to persuade Congress to adopt a new “special-purpose charter” for stablecoin operators and similar businesses. Although the legislation’s exact form was unknown, it was believed to be suited to these business models.
Authorities have recently raised concerns about stablecoins, claiming they are really not better controlled. Stablecoins like Tether (USDT) and USDC Coin (USDC) must be regulated like money markets like bank deposits, according to Federal Reserve Chairman Jerome Powell. He insisted that no broad prohibition on Bitcoin (BTC) or other digital products was planned, he insisted.
In a 49-page report titled “Taming Wildcat Stablecoins,” the Fed and Yale University suggested two legislative frameworks for stablecoins. They stated that politicians have just two options when it comes to stablecoin regulations: convert them to fiat currency or charge them out of existence.