SEC Shouldn’t Regulate Crypto Stablecoins, Says Circle CEO

Circle chief Jeremy Allaire has reacted to the recent spree of enforcement actions by the US Securities and Exchange Commission (SEX) and other agencies in the crypto industry. In an interview with Bloomberg, the Circle boss shared his views regarding SEC’s recent moves on BUSD stablecoin issuer Paxos.

Circle, a Boston-based firm, is the issuer of the second-largest stablecoin, USD Coin (USDC), with more than $42 billion in circulation. In the interview, its chief exec, Jeremy, suggested that USD-pegged stablecoins should be under a bank regulator.

SEC Has No Business With Crypto Stablecoins

During the interview, Circle’s chief executive officer Jeremy Allaire stated that the US SEC has no business with payment stablecoins. According to him, stablecoins are a payment system and should fall under the regulatory jurisdiction of a banking regulator and not the SEC. 

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 executive seems displeased with the SEC’s recent moves on stablecoins. In his words, several countries’ governments, including the US, have a reason for addressing stablecoins as a payment system that falls under the responsibility of banking regulators. 

Although the Circle chief shares this view, his firm confirmed it has not come under the SEC’s radar. However, given the recent desist notice to Paxos and other ongoing regulatory activities, a move on Circle by the SEC is possible. 

Although the CEO was against the SEC’s move on the stablecoin, he favored the regulator on one thing. Jeremy applauded the SEC’s recent proposal on crypto custody to streamline exchanges who want to become custodians.

In his words, it is crucial to have qualified custodians that can provide appropriate market control structures and bankruptcy protections. Therefore, a crypto exchange should not wake up and become a custodian without meeting the requirements. 

SEC Accused Of Pushing Enforcement Forcefully

Also, earlier on February 23, Allaire concurred with SEC Commissioner, Hester Peirce, who said the watchdog should refer to Congress regarding legislation for crypto regulation and enforcement.

In a tweet, Peirce commented on people’s reactions to the SEC and its moves on stablecoins. According to the commissioner, Congress is actively considering the issue of crypto regulatory framework and legislation, so the SEC should turn to them for answers. He also said the SEC and other regulators could hold public roundtables to discuss the matter. Pierce ended his note by saying there are better ways to make rules than enforcement actions. 

Allaire’s views align with many others who reacted to the SEC’s recent actions on the crypto industry. Due to the lack of legislation for crypto regulation, many believe the SEC needs to consult Congress before taking matters into its hands regarding cryptocurrency enforcement.

Responding to the ongoing lawsuit between the SEC and a former Coinbase employee, the Chamber of Digital Commerce lambasted the watchdog. The agency accused the SEC of using a back door approach to label crypto assets securities without legislation from Congress.

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