Stablecoins are expected by Circle to become a global payment standard

Circle, the company behind USDC, the second-largest stablecoin globally, is "confident" that stablecoins will become mainstream money. At the same time, they emphasize the need for globally harmonized regulations to ensure compliance among all stablecoin issuers.

“Circle is confident that stablecoins will be adopted as the primary money for the internet era,” stated Dante Disparte, Circle’s chief strategy officer and head of global policy, in an exclusive interview with Cointelegraph.

Disparte added, “We expect to see internet payment companies and other financial services firms entering or expanding in this space, signaling that stablecoins are here to stay.”

However, Disparte also stressed the importance of global regulatory alignment. He emphasized that the principles of conservative reserves and financial crime compliance should apply equally to all companies claiming to issue payment stablecoins.

Disparte's remarks follow Circle’s decision to move its global headquarters to New York by early 2025, after filing for an initial public offering (IPO) in January.

He noted that the U.S. regulatory framework allows state banking and money transmission supervisors to govern the payments industry at the state level, while other countries regulate these activities on a national level.

Disparte raised the question of whether the U.S. will finally introduce federal stablecoin regulations or continue with the current uncertainty, which both political parties consider unacceptable.

“The lack of a U.S. regulatory framework for dollar-backed stablecoins threatens American interests. This gap could lead to the creation of products that exploit trust in the dollar while avoiding U.S. regulations, potentially serving as a haven for illicit actors,” he explained.

Disparte argued that federal legislation is crucial to fostering safe competition in how Americans transact, save, and secure their money in an increasingly tech-driven market.

He pointed out that the stablecoin bill advanced by the House Financial Services Committee in July 2023 has gained substantial policy support and momentum.

“Congress should pass the bill on a bipartisan basis, and the President should sign it if it reaches his desk. The legislation would establish a baseline for all issuers to meet U.S. anti-money laundering, counterterrorism financing, and sanctions obligations,” Disparte said.

These standards, he added, should apply to both U.S. issuers of payment stablecoins and their international counterparts, many of whom are being licensed to issue dollar-denominated stablecoins in regions like the EU and UAE.

The European Union’s Markets in Crypto-Assets Regulation (MiCA) began to take effect in June, with new rules for stablecoins becoming enforceable on June 30.

On July 1, Circle became the first global stablecoin issuer to achieve MiCA compliance, securing an Electronic Money Institution (EMI) license from French regulators. Under MiCA’s rules, Circle’s USDC and EURC are fully compliant.

“With MiCA, Europe has done what other regions, including the U.S., have not yet managed: providing clear legal and regulatory guidelines for the entire digital asset market,” Disparte said. However, he acknowledged that “Like any new regulatory framework, MiCA is not perfect. It can be overly prescriptive in certain areas, leading EU policymakers to already consider MiCA 2.0, which could address gaps related to NFTs, decentralized finance, and other areas.”

Competition in the stablecoin sector is intensifying with new players like PayPal’s USD-pegged stablecoin, PYUSD, which has already surpassed $1 billion in market cap. Ripple Labs is also testing its USD-pegged stablecoin, RLUSD, on both the XRP Ledger and Ethereum, and it has plans for further expansion.

Meanwhile, Tether’s USDT remains the dominant stablecoin, boasting a market cap of over $118 billion, according to CoinMarketCap. Tether also announced plans to launch a new stablecoin pegged to the UAE dirham (AED).

As of Aug. 26, the market cap for non-algorithmic stablecoins reached a record high of $168 billion, surpassing the previous all-time high of $167 billion in March 2022, though it had dropped to $135 billion by the end of that year.

“We welcome any competitors to join us in the U.S., EU, Singapore, and beyond, to undergo a rigorous licensing process, adhere to the same standards that define our company, and help grow this ecosystem as compliant, regulation-first companies,” Disparte added.