SEC is Not the Appropriate Regulator of Crypto Assets, Says Circle CEO
- Circle CEO Jeremy Allaire stated in an interview that the SEC is not the appropriate organization to regulate crypto.
- Allaire stated that the dollar-pegged “payment stablecoins” should be under the oversight of a banking regulator and not the Commission.
- The executive supports the proposal by the regulator to make it more difficult for crypto companies to serve as custodians of digital assets.
The actions taken by the United States Securities and Exchange Commission when it comes to the regulation of crypto assets haven’t been top-notch and attracted the criticism of crypto proponents as well as Congressmen because of the regulator’s failure in protecting investors. Interestingly, the CEO and founder of Circle, the firm behind the stablecoin USDC, Jeremy Allaire, recently stated that the SEC is not the appropriate organization to regulate crypto.
In an interview with Bloomberg on Feb. 24, Allaire stated that SEC is not fit to regulate the crypto sector because of the unfair treatment provided to crypto firms and gave the example of the action taken by the regulator against Paxos, a New York-based financial institution and technology company specializing in blockchain.
As reported earlier by Bitnation, the SEC issued a Wells Notice to Paxos which is the creator and owner of crypto exchange Binance’s BUSD stablecoin, a crypto coin which is pegged to the US dollar in a 1:1 ratio. The securities regulator believes that BUSD is an unregistered security and therefore, asked Paxos to shut down its issuance. Interestingly, the payments company confirmed that it would put a pause to the creation of BUSD stablecoins.
The Circle executive stated that the dollar-pegged “payment stablecoins” should be under the oversight of a banking regulator, and not under the control of the SEC. “I don’t think the SEC is the regulator for stablecoins,” said Allaire, while adding that “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.”
“There are lots of flavors, as we like to say, not all stablecoins are created equal,” Allaire said adding, “But, clearly, from a policy perspective, the uniform view around the world is this is a payment system, prudential regulator space.”
However, the Circle CEO stated that he supports the proposals set forth by the Gensler-led Securities and Exchange Commission to “expand the scope” of rules set out by the 2009 Custody Rules. The proposal would make it more difficult for crypto companies to serve as custodians of digital assets in the near future.
The regulator stated in the proposal that generally a federal or state-chartered bank or savings association, trust company, a registered broker-dealer, a registered futures commission merchant or a foreign financial institution can be qualified as a custodian.
“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.”
The SEC has recently become quite active when it comes to cracking down on crypto frauds and scams. The regulator recently filed a lawsuit against Do Kwon and Terraform Labs for wiping off $40 billion from the crypto industry using fake promises. The two allegedly orchestrated “a multi-billion dollar crypto asset securities fraud,” claims the regulator.
Furthermore, the SEC also fined crypto exchange Kaken around $30 million for providing staking services to US residents and failing “to register the offer and sale of their crypto asset staking-as-a-service program.” Crypto exchange Coinbase slammed the regulator stated that its staking services are not securities and they will take the matter to the court if needed.