SEC is not the appropriate regulator for stablecoins: Circle CEO

Published at: Feb. 24, 2023

The United States Securities and Exchange Commission (SEC) is not the appropriate regulator for stablecoins, says Circle founder and CEO Jeremy Allaire.

In an interview with Bloomberg on Feb. 24, the Circle chief executive aired his views on the SEC and its recent moves to clamp down on the crypto industry, including stablecoin issuer Paxos.

Allaire appears to have taken issue with the SEC's focus on stablecoins, arguing that dollar-pegged “payment stablecoins” should be under the oversight of a banking regulator, rather than the SEC.

“I don’t think the SEC is the regulator for stablecoins,” said Allaire, adding:

“There is a reason why everywhere in the world, including the US, the government is specifically saying payment stablecoins are a payment system and banking regulator activity.”

Circle confirmed last week that it had not been targeted by the SEC following the issuance of a Wells notice to Binance USD (BUSD)-issuer Paxos.

“There are lots of flavors, as we like to say, not all stablecoins are created equal,” Allaire said before adding, “But, clearly, from a policy perspective, the uniform view around the world is this is a payment system, prudential regulator space.”

Circle's Jeremy Allaire says banking regulators would be better for overseeing stablecoins than the SEC https://t.co/8nibUU4taW

— Bloomberg Crypto (@crypto) February 23, 2023

The Circle CEO however said that he was generally in favor of a recent SEC proposal on crypto custody that would make it much harder for exchanges to become custodians.

“We think having qualified custodians that can provide the appropriate control structures and bankruptcy protections and the other things is a very important market structure and very valuable.”

Circle is the issuer of the world’s second-largest stablecoin, USD Coin (USDC). It has a circulating supply of $42.2 billion which gives it a market share of 31%. Tether remains the dominant stablecoin with a supply of $70.6 billion and a market share of 52%, according to CoinGecko.

Related: Why the SEC wants to ban crypto staking and stablecoins under scrutiny

On Feb. 23, Allaire agreed with SEC Commissioner Hester Peirce who said that the agency should refer to Congress. Due to the lack of legislation, some believe the SEC has been taking things into its own hands concerning crypto regulations and enforcement.

It’s time for Congress to get busy legislating. That’s what you do when things are new, complex and have broad impact on society. Thanks @HesterPeirce https://t.co/4EaX4RqcE9

— Jeremy Allaire (@jerallaire) February 23, 2023

Circle is expanding its headcount by as much as 25%, bucking the general trend of crypto layoffs, the report noted.

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