Jeremy Allaire, CEO of Circle, the company behind the issuance of usd coin (USDC), has expressed his worries about the state of stablecoin regulation in the U.S. In a congressional hearing, Allaire stated that other governments were already regulating the issuance of digital dollars (dollar-backed stablecoins) and called on the U.S. government to act by issuing stablecoin rules.

Circle CEO Jeremy Allaire Calls for Stablecoin Regulation: ‘It’s Time to Act.’

Jeremy Allaire, CEO of Circle, a U.S.-based stablecoin company, has called for stablecoin regulation to preserve the country’s sovereignty over the issuance of digital dollars. In a congressional hearing, Allaire explained that other countries have already drafted and established frameworks for issuing dollar-backed stablecoins, leaving the U.S. behind.

Allaire explained:

We are seeing governments around the world — the EU, the U.K., Japan, Hong Kong, Singapore, and others — actually defining the rules for how dollars, digital dollars, are issued and operate in those markets, which is astounding.

Furthermore, Allaire detailed how the lack of regulation could have “devastating consequences” for the competitiveness of the U.S. dollar in a world driven by digital interactions on the internet. Allaire recently reiterated his call to action on social media, stating: “It’s time to act.”

How Commercial Banking Affected USD Coin

Circle is the company behind usd coin (USDC), the second largest stablecoin in the crypto market, with a market cap of $28.3 billion. The token suffered a depegging incident in March due to the demise of Silicon Valley Bank (SVB), which held 8.8% — about $3.3 billion — of the total reserve backing the USDC stablecoin.

The depeg, which took the price of usd coin as low as $0.85, was reverted with the announcement that all the depositors of SVB would be made whole. At the time, Allaire remarked on the importance of establishing clear rules to avoid this from happening again, advocating for “full-reserve digital currency banking that insulates our base layer of internet money and payment systems from fractional reserve banking risk.”

Stablecoins have risen as a significant part of the cryptocurrency market, with a notable jump in their utilization. According to Kaiko, a cryptocurrency market data provider, the utilization of stablecoins has risen to 76% of all cryptocurrency transactions. This represents a 16% increase since the beginning of 2022.

A new stablecoin legislation draft was released by House Financial Services Committee Chair Patrick McHenry on June 8.

Source: BitCoin