Circle, an issuer of stablecoins, is optimistic that internet payment companies and other financial services companies will seek to enter or scale into the industry.
Circle, the company that floats the second-largest stablecoin, USDC, is rather sure that stablecoins will become the new form of money. At the same time, it is necessary to provide the coherence of regulations for global conformity to ensure compliance for all payment stablecoin issuers. Circle believes that there would be more widespread use of stablecoins than Money of the Internet age,” said Dante Disparte, who is the Chief Strategy Officer and Global Policy Head at Circle while talking to Cointelegraph during an interview.
“There will probably be internet payments firms as well as financial services businesses that (will) seek to enter or grow in this sector, which is a clear indicator that stablecoins are here to stay,” Disparte noted.
Despite that, Disparte thinks that rules and regulations must be synchronized across the world. He stated that if anyone wants to issue what they call a payment stablecoin, then the basic principles of conservative reserving and, most importantly, financial crime compliance should also be adopted.
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Circle moves to New York
Disparte’s remarks arrive as Tether prepares to relocate its worldwide headquarters to New York no later than early 2025 following an IPO filing in January. Disparte explained further that, under the US framework, state banking and money transmission supervisors are governing and building the payments industry at the state level. Some countries control payments or electronic money (e-money) at the circuit level at the national level.
“The question now is whether the US will enshrine stablecoins at the federal level or keep the current environment of ambiguity, which is considered by politicians of both parties in the United States as entirely unsuitable,” Disparte said. He explained:
“Lack of a US regulatory regime for dollar-referenced stablecoins is harmful to the American interest, as this gap may encourage further development of products which utilize dollar credibility in bypassing regulations and could act as a haven for users of illicit activities.”
Stablecoins being a legal tender require federal legislation to support safe competition on how Americans transact, save, and invest their funds in a technology-infused market according to Disparte. The stablecoin bill introduced in July 2023 by the House Financial Services Committee has created much policy movement and support, he said. Congress should pass such a bill on a bipartisan basis and such legislation, if presented to the President for his signature, should not be vetoed. The legislation would establish a floor and provide a standard for all issuers about their anti-money laundering, countering of terrorist financing, and sanctions compliance obligations in the United States. He said these norms should apply to US issuers of payment stablecoin and other equivalent payment stablecoins many of which are being licensed to issue dollar pegged stablecoins from other jurisdictions such as EU and UAE.
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Will EU’s MiCA 2.0 fill gaps in the regime?
MiCA, or the Markets in Crypto-assets Regulation, was partly implemented in June in the European Union and an updated set of rules for stablecoins are set to take effect as of June 30. On July 1, Circle claimed that it had become the first global stablecoin issuer that provides compliance with the MiCA regulatory framework by receiving the Electronic Money Institution (EMI) license from the French bank regulating authority. Such are Circle’s USDC (USDC) and EURC, which fit the new rules governing the organization.
“With MiCA, Europe succeeded in doing what other jurisdictions, including the U. S., have yet to achieve: Legal and regulatory certainty for not one segment of the digital asset market but all of it,” stated Disparte. However, he pointed out:
“Therefore, MiCA is not simply perfect; it is an otherwise novel set of rules or comprehensive regulations that at times, can be over-technical, or at another extreme, overly prescriptive for EU’s policymakers such that they are already mulling over a potential MiCA 2.0 which would potentially extend the regime to, for instance, non-fungible tokens, decentralized finance, and other related areas.”
Stablecoin market sees increasing competition
Competition in the stablecoin market is intensifying due to the recent developments of new projects directly related to PayPal such as PayPal USD (PYUSD tickers down $1.00), it has crossed the market capitalization mark of $1 Billion. Ripple Labs has already begun testing its @RippleUSD, which is a USD-pegged stablecoin on the XRP ledger and Ethereum blockchains with plans to roll it out to others. As of August this year, Tether’s USDT is still the biggest stablecoin with its market cap standing above $118 billion, as per CoinMarketCap. Tether has also revealed his plans to develop a new stablecoin linked to the UAE dirham (AED). As of August 26, stablecoins’ market cap, excluding algorithmic ones, amounted to $168 billion. The market reached its peak of $167 billion in March 2022 but reduced to $135 billion by the end of the year 2022.
“We’re saying to anyone who wants to compete to come to America, the EU, Singapore, and many others to get through a rigorous licensing procedure, to adhere to the standards that are the foundation for the company and become a regulation first, compliant company for this ecosystem to grow beyond the horizon into the future,” Disparte said.