The CEO of Circle, Jeremy Allaire, has warned that the United States dollar’s position as a global reserve currency could be threatened if Congress does not regulate stablecoins in a timely manner. Circle is the issuer of USD Coin (USDC), a popular stablecoin. Allaire made this statement in a two-minute video targeted at lawmakers, which was released on July 13.
Allaire’s statement comes as bipartisan legislation specifically addressing digital assets was reintroduced to Congress on July 12. This legislation was originally tabled over a year ago in June 2022. Allaire emphasized the increasing competition for digital currencies on the internet, particularly from foreign digital currencies.
He stated, “The dollar’s position of strength is under threat. Competition for what money gets used on the internet is increasing.” Allaire further elaborated that the real question is whether global commerce will be conducted in digital dollars, euros, or yuan. He has previously argued that China could benefit from stablecoins and increase the adoption of the yuan.
Allaire emphasized the importance of the United States making a choice on whether it wants the dollar to be the foundation of currency on the internet or if it will let other countries take the lead. He urged Congress to regulate stablecoins and build trust in digital dollars to ensure that the dollar remains the world’s reserve currency and that America continues to lead the world economy.
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In his argument for stablecoin regulation, Allaire highlighted the transformative potential of cryptocurrencies in changing the way people make payments. He claimed that crypto will fundamentally change the way we pay for things and that billions of people will use it due to the inefficiencies of traditional financial payments, which often take days and have high fees that amount to a significant tax on the global economy.
Mike Novogratz, the founder of Galaxy Digital, a crypto investment firm, expressed agreement with Allaire’s perspective. He posed a rhetorical question to his Twitter followers, asking them whether they would prefer to own a stablecoin backed by US government securities that pays up to 5% interest, or a deposit at a bank that operates like a hedge fund and pays only 2% interest. Novogratz clearly favored well-regulated stablecoins and hoped that US lawmakers would support their development rather than opposing it.
The comments from both Allaire and Novogratz reflect a growing recognition among industry leaders of the potential benefits of stablecoins and the importance of regulatory clarity to ensure their continued growth and adoption. Stablecoins, which are cryptocurrencies pegged to a stable asset like a fiat currency, offer the advantages of fast, low-cost transactions and the stability of traditional currencies. However, concerns over their potential impact on the global financial system and the need for regulatory oversight have also been raised.
In conclusion, the CEO of Circle has warned that the US dollar’s dominance as a global reserve currency could be at risk if stablecoins are not regulated promptly by Congress. He emphasized the increasing competition for digital currencies and urged lawmakers to regulate stablecoins to maintain the dollar’s position. This warning has received support from industry leaders who recognize the potential benefits of well-regulated stablecoins. The future of digital currencies and their impact on global commerce will depend on the actions taken by lawmakers to address this emerging asset class.
