Following the most recent crackdown by the US Securities and Exchange Commission against several crypto companies, Jeremy Allaire opined that the agency is not the best fit to oversee stablecoins in particular.
He believes these assets are part of the banking sector, thus, they need to be regulated by another watchdog in the States.
- The past several weeks saw the US securities regulator going after several locally based crypto firms, starting with Kraken and its staking services. The exchange had to settle with the watchdog, pay a $30 million penalty, and halt its staking platform.
- Days later, the SEC sent a Wells warning to Paxos, alleging the company of selling unregistered securities when it issues the Binance USD (BUSD) stablecoin.
- This rattled a lot of cages in the community, as stablecoins were widely considered non-securities. It also brought the attention to other stablecoin issuers, such as Tether and Circle.
- The latter’s CEO – Jeremy Allaire – spoke to Bloomberg about the current situation and asserted that the SEC doesn’t seem like the proper regulator for such cryptocurrency assets.
“I don’t think the SEC is the regulator for stablecoins. 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.”
- Nevertheless, Allaire admitted that “not all stablecoins are created equal.” This comes less than a year after the controversial algorithmic attempt from Terra (UST) crumbled to virtually $0, wiping the entire $40 billion ecosystem out.
- At the same time, Circle’s CEO praised the SEC’s recent proposal to incorporate more stringent rules on crypto 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,” Allaire said. “We have seen a lot of lessons learned that random exchanges have your assets. There is a reason why you have that kind of rule.”