Circle CEO Jeremy Allaire has called for stablecoin regulation in the United States to ensure the country’s control over the issuance of digital dollars. During a congressional hearing, Allaire highlighted that other countries have already established frameworks for issuing dollar-backed stablecoins, leaving the US behind. He emphasized the potential “devastating consequences” if the lack of regulation continues, as it could impact the competitiveness of the US dollar in the digital world. Allaire reiterated his call to action on social media, urging regulators to take action.
Circle is the company behind the USD Coin (USDC), the second-largest stablecoin in the crypto market. In March, the USDC experienced a depegging incident due to the collapse of Silicon Valley Bank (SVB), which held a significant portion of the reserve backing the stablecoin. Allaire emphasized the importance of clear rules to prevent such incidents and advocated for “full-reserve digital currency banking” to mitigate fractional reserve banking risks.
Stablecoins have gained prominence in the cryptocurrency market, with their utilization increasing to 76% of all cryptocurrency transactions, according to data provider Kaiko. This represents a 16% jump since the beginning of 2022. In response to the need for regulation, the House Financial Services Committee Chair Patrick McHenry released a draft legislation for stablecoins on June 8.
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